Docum The WorJ FOR OFYlCLU Report No. 9935 PROJECT COMPLETION REPORT CHINA SEEDS PROJECT (CREDIT 1577-CHA) OCTOBER 5, 1991 Agriculture Operations Division Country Department III Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalercs US$ 1.00 - Yuan 2.80 (1985 appraisal) US$ 1.00 - Yuan 3.45 (1986) US$ 1.00 Yuan 3.72 (1987-1989) US$ 1.00 Yuan 4.72 (1990 onwards) Yu.n 1.00 US$ 0.32 Fiscal Year January 1 - December 31 Abbreviations BSF Bureau of State Farms DANIDA Danish International Development Agency ERR Economic Rate of Return FRR Financial Rate of Return GDP Gross Domestic Product ICB International Competitive Bidding IDA International Development Association MOA Ministry of Agriculture NSC National Seeds Corporation PLG Project Leading Group PMO Project Management Office PRS Production Responsibility System NCP North China Plain Project Office SAR Staff Appraisal Report TA Technical Assistance FOR OFFICIAL USE ONLY THE WORLD BANK Washington DC 20433 USA ONsce of Dlrectdo-General Ope^tatons Evaluatiiln October 5, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on China Seeds Proiect (Credit 1577-CHA) Attached, for information, is a copy of a report entitled "Project Completion Report on China Seeds Project (Credit 1577-CHA)" prepared by an FAO/World Bank Cooperative Program with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAI, (JSL ONlY PROJECT COMPLETION REPORT CHINA SEEDS PROJECT (Credit 1577-CHA) Table of Contents Page No. PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i EVALUATION SUQi4ARY . . . . . . . . . . . . . . . . . . . . . . . iii PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . . . . . . . . . . . 1 Project Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Project Objectives and Description . . . . . . . . . . . . . . . . . . 2 Project Design and Organization . . . . . . . . . . . . . . . . . . . . 3 Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . 4 Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Project Sustainability . . . . . . . . . . . . . . . . . . . . . . . . 9 Bank Performance. . . . . . . . . . . . . . . . . . . . . . . 9 Borrower Performance . . . . . . . . . . . . . . . . . . . . . . . . . 10 Project Relarionship . . . . . . . . . . . . . . . . . . . . . . . . . 10 Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Project Documentation and Data . . . . . . . . . . . . . . . . . . . . 11 PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . . . . . . . 12 Project Implementation and Results . . . . . . . . . . . . . . . . . . . 12 Project Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Training and Consultants . . . . . . . . . . . . . . . . . . . . . . . . 13 Benefit . . i . . . . . . . i . . . . . . . . . . . . . . . . . . . . . 14 Evaluation, Findings and Conclusion . . . . . . . . . . . . . . . . . . 14 Problems and Suggestions . . . . . . . . . . . . . . . . . . . . . . . . 15 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Comments on Part I . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Comments on Part III . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Function of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . 18 Relations with Other Agencies. . . . . . . . . . . . . . . . . . . . . . 19 PART III - STATISTICAL INFORMATION . . . . . . . . . . . . . . . . . . . . 21 1. Related Banlc Credits . . . . . . . . . . . . . . . . . . . . . . . . . 21 2. Project Timetable ......... . ............... . 22 3. Credit Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . 22 4. Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . 22 5. Project Cost and Financing ....... . ............ . . 24 A. Project Cost. . . . . . . . . . . . . . . . . . . . . . . . . . 24 B. Project Financing . . . . . . . . . . . . . . . . . . . . . . . 25 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Page No. 6. Project Results ........................ 25 A. Direct Benefits ... .. 25 B. Economic Impact .. 25 C. Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . 26 D. F nancial Impact. . . 27 E. Financial Analysis . . . . . . . . . . . . . . . . . . . . . . 27 F. Studies.. . 28 7. Status of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 28 8. Use of Bank Resources. . . . . . . . . . . . . . . . . . . . . . . . 29 A. Staff Inputs. . . . . . . . . . . . . . . . . . . . . . . . . . 29 B, Missions . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Map - Location of Project Institutions . . . . . . . . . . . . IBRD No. 23286 i PROJECT COMPLETION REPORT CHINA SEEDS PROJECT (Credit 1577-CHA) PREFACE This is the Project Completior. Report (PCR) for the Seeds Project in China, for which an IDA Credit (Credit 1577-CHA) in the amount of SDR41.7 million (US$40.0 million equivalent) was approved on April 11, 1985. The project was designed to upgrade facilities at 18 seed production, processing and distribution centers in twelve provinces and two autonomous regions. The Credit was closed after a one-year extension on December 31, 1990. Last disbursement was on December 21, 1990, and the credit has been fully disbursed. Parts I and III of the PCR were prepared by an FAO/World Bank Cooperative Program and IDA mission which visited China during April/May 1991 and is based, inter alia, on an initial draft produced by the Project Management Office which was locally reviewed in a meeting in Beijing in February 1991, the Staff Appraisal Report (No. 5384-CHA), the Credit Agreement (1577-CHA), supervision reports, correspondence between the Bank and the Borrower, internal Bank memoranda and discussions with staff of the implementing agencies. Part II was prepared by the Seeds Project Office, Ministry of Agriculture, China. iii PROJECT COMPLETION REPORT CHINA SEEDS PROJECT (Credit 1577-CHA. EVALUATION SUMMARY Objectives 1. The principal objective of the project was to assist the Government in developing the seed industry by: (a) modernizing facilities at 18 seed production, processing and distribution centers; (b) strengthening the National Seed Corporation (NSC) in particular in seed testing and certification services; and (c) contributing to increased production of high quality seed for major food and cash crops. The project was also expected to servc as a model for planned construction over the next two decades of over 300 modern seed centers. Implementation Experience 2. The project has been successful in achieving its objectives. Project implementation has been effective and on schedule, except for initial delays in starting construction at a small number of processing sites due to protracted negotiations and late signing of contracts. The quality of work has generally been excellent. Most of the equipment installed has performed up to expectation, except for part of the cotton seed processing equipment supplied by one of the manufacturers. The problem was eventually corrected by local staff. Technical assistance (TA) and training achieved all its targets. However, some changes in the content of TA and training became necessary to adjust to cha.nging needs of the project, funding constraints and rising costs. Also, construction of seed nroduction bases lagged behind other project components, in part due to lack of counterpart funds and expansion of the production area. In order to complete the works and allow time for execution of contracts for supply of remaining equipment and materials, and to carry out further training, the project closing date had to be extended by one year. Project Results 3. Most of the project objectives have been achieved. Modern seed processing facilities were established in 18 seed centers. These include 43 complete processing lines installed in 32 seed plants and 21 individual seed processing machines which are operational at the 18 seed centers. In 1990, about 230,000 tons of certified seeds were produced, with some plants having excess capacity due to slight over-design of the plants (see para 18). Training and technical assistance have strengthened operation of equipment, project management, seed testing and quality assurance and control and selected techinical expertise (see para 23 and 24). The project also provided for the development and improvement of crop seed land bases. A total of 78 seed bases under the 18 seed centers were developed and equipped for full- scale seed production. However, seed quality assurance and control procedures need to be further enhanced to ensure high quality seed output and facilitate a gradual change to international seed testing standards. Lessons learned iv during implementation about improved seed marketing services need to be widely applied during the post-project era, so as to ensure optimal annual capacity utilization and to further enhance crop production benefits (see para 28). At appraisal, the economic rate of return (EPR) was estimated at 38% and is now re-estimated at 72%, due mairnly to a substantial increase in the output of processed hybrid rice seed and the resulting large incremental paddy production (see para 23). Sustainability 4. The project has made a significant contribution in establishing modern prodtiction and processing facilities in 18 seed centers. At appraisal, the Government had assured that margins between retail prices of processed seeds and full production costs available to seed centers would be maintained at a level of 20% t. 30% above full production cost. In actual fact, however, under the Government's prevailing seed pricing policy, the margins allowed to seed companies are much lower, except for wheat seed (see para 27). As a result, the financial viability of the seed centers and their ability to create adequate reserves for maintenance, repairs and replazement is in jeopardy. Project sustainability will largely depend on the seed companies becoming self-financing, autonomous institutions and perhaps, in the future, private sector participation in seed production and distribution could be encouraged. Government has assured its continuous support to the operation of the seed centters, even if this would involve injection of additional capital and/or operational subsidies, and decided to maintain the Project Management Office (PMO) to provide continuous guidance and support to the seed centers from the central level. However, budgetary implications of this policy would need closer examination especially in the context of the plans for construction over the next two decades of over 300 seed production, processing and distribution centers throughout the country. Findings and Lessons Learned 5. The need for a national seeds project was unquestionable. The project was conceived and designed at a time when the seed production and processing facilities in China were not only inadequate but also in need of upgrading and modernization, both under the collective and state farm systems. During the project implementation period, there were a number of areas in the seed industry which were affected by structural reforms, in particular the inclusion of the seed processing sector in the production responsibility system (PRS), that were not anticipated at appraisal. This inclusion had a profound effect on project management in that seed companies now have to deal with large numbers of individual households instead of big production units like the brigades. Consequently, complexities of marketing of seeds have increased, Further. at appraisal, the demand for seeds (mainly conventional rice seeds) was somewhat over-estimated and seed processing capacities planned accordingly leading to under-utilization of installed capacities in some of the seed centers. Shortfalls in capacity utilization are also due to dispersed decision making at lower levels and deficiencies in marketing intelligence and skills. There is scope for increasing seed sales but it will require more aggressive, innovative and promotional marketing than that is in v place at present. Improved marketing would need to be complemented by strengthening support services, (extension, demonstration, input supply), especially to individual households under the PRS system. This could be accomplished by developing an array of on-farm demonstrations on the benefit of improved seeds at all major seed centers, and on farmers, fields, 6. The main lessons from experience of che project implementation are: (a) in planning seed development, the importance of on-farm production, retention, and farmer-to-farmer exchange of seeds, particularly for conventional rice, needs to be recognized (para 18); (b) seed prices have to be set adequately high, to reflect all investment and operational costs, including depreciation, to ensure financial viability of the investment and sustainability of the operation (para 27); (c) efficient tendering procedures for procurement of machinery and equipment should be devised so as to ensure that they are not cumbersome and to require successful bidders to provide more detailed designs (para 19) in order to avoid delays and installation problems. 7. Implementation experience has also shown that strong central guidance and support has substantially contributed to making the project a success and that staff continuity, especially of personnel trained under the project, is of critical importance. 1 PROJECT COMPLETION REPORT CHINA SEEDS PROJECT (Credit 1577-CHA) PART I _ R9JECT REVIEW FROM BANK'S PERSPECTIVE Project Identity Project Name Seeds Project Credit No. 1577-CHA RVP Unit Asia Region Country China Sector Agriculture Sub-sector Agricultural Support Services Background 1. Agriculture continues to be a key sector of China's economic development, providing sustenance to over one billion people, is the source of income for over 190 million farm families and accounts for about 30% of Gross Domestic Product (GDP). In 1990, foodgrains occupied about 70% of the crop land and accounted for one-third of total agricultural output. In view of the limited opportunities for expanding the total cropped area, growth strategy has focussed on increasing yields on existing cultivated areas. This strategy was critically dependent, among other factors, on the provision to farmers with good quality seed. Over the years, the Government had encouraged the establishment of a national network of seed enterprises under the Ministry of Agriculture (MOA). At appraisal, the basic mechanisms were in place, however, deficiencies in processing technology and quality assurance and control procedures resulted in production of poor quality seed. This in turn translated into excessively high seeding rates, high production cost and les. than optimum yields. 2. To address these shortcomings, the Government had increased investments in the seed industry and long-range plans called for the establishment or upgrading of over 300 seed centers throughout China. Based on projected crop production requ're-ments and consideracion of regional "omparative advantage, the Government, in consultation with Bank staff, selected 18 seed centers for inclusion in the project. This was the first project of its kind financed by Kl the Bank in China which subsequently was followed by a series of development projects with a seed component (see Part III/1). 2 Prolect Obije5tives and Description 3. The principal objective of the proposed project was LO assist thle Government in developing the seed industry. The project was to modernize facilities at: 1.8 seed productioni, processing arid distribution centers in 12 provinces and 2 autonomous regions. It was also itntended to strenlgtheln operations of China's central seed agency, the National Seeds Corporation (NSC), in particular its seed testing and certification services. The project was expected to contribute to increased producrion of high-quality seeds for major fooci and cash crops and to serve as a model for phased construction over the next two decades of over 300 modern seed centers. 4. The project as appraised, included the following main components: (a) construction ,f about 350,000 m2 of buildings for processing plants, warehouses, testing laboratories and staff housing; (b) improvements to about 28,000 ha of seed farms including land levelling and construction or upgrading of 480 km of rural roads, 1,550 km of irrigation canals and drains, about 165 wells, and five pumping stations; (c) provision of seed processing and laboratory equipment; (d) provision of farm machine:y, vehicles and materials; (e) local and overseas training in seed technology, quality assurance and control, and management for staff of the centers and implementing agencies; (f) technical assistance to conduct seminars and workshops in seed technology, quality assurance and control, and management and to help develop a model seed technology and science curriculum at four agricultural colleges; and (g) studies of seed supply and demand, marketing and prices, and quality assurance and control procedures. 5. The 18 project seed centers are located ir widely differing agro- ecological zones. Three of them are in the Northeast (Jilin and Liaoning); four in Northwest border provinces (Xinjiang and Nei Monggol autonomous regions); two in North China (Shandong and Henan); three in East China (Anhui, Jiangsu); two in Central China (Hunan and Jiangxi); two in South China (Guangdong, Fujian); and two in the 3outhwest (Sichuan and Yunnan). These provinces/autonomous regions represent principal producing areas for major food and cash crops including rice, wheat, corn, soybean, potatoes, fruit and vegetables, sugar crops, and cotton. 6. The project was to be implemented over a period of four years, at a total cost of US$86.8 million and an IDA Credit of SDR41.7 million (US$40 million equivalent at appraisal) was made available. Of the total project cost, buildings accounted for 23%, seed farm development for 17%, equipment and materials for 42%, training and technical assistance for about 2%, and 3 physical and price contingencies for the balance. Overall responsibility for project implementations was with tne MOA. Proiect Design and Organization 7. Design. The project was designed to overcomie the main weakntesses of the seed industry, i.e., poor management, inadequate technical supervision and lack of processing and seed production bases and storage facilities. It, therefore, inicluded the provision of advarnced equipment for seed drying, processing, packaging and laboratory analyses; introduction of techniques for preparing facility layouts and dcveloping uniform quality assurance/control procedures; and approaches to technical and business management of seed enterprises. Over the long term, this transfer of technology and expertise was to facilitate rapid modernization of seed processing facilities, as well as strengthening the capacity of the NSC to administer a modern national system for seed marketing and control. 8. The project represented the first operation funded by the Bank group in support of the seed industry in China. Its concept of introducing modern technology and management practices was innovative and sound; the conceptual basis being clearly understood, both by the Bank and the Borrower. The scope and scale of the project were appropriate in the context of its objectives. The initial project proposal was prepared by the Government in 1983, and pre- appraised by an IDA mission in May 1984, followed by an appraisal in August 1984. In general, the project was well prepared. There were, however, some weakness' in the project design such as: (a) too little attention was paid to the increasingly complex management (including marketing) requirements, resulting from the introduction of the production responsibility system (see para 8.1); (b) the demand for conventional rice seed was over-estimated; and (c) the project was established in isolation, without due regard to the critical forward linkages to the farm households, especially extension and marketing (see para 8.2 c). 9. Organization. As planned at appraisal, the MOA had overall responsibility for project implementation and a project management office (PMO) was established with staff drawn from the North China Plain (NCP) Project Office, NSC and Bureau of State Farms (BSF), all under the MOA. In addition, Government had established a project leading group (PLG) to provide overall coordination of project activities and the required linkages between the PMO and other agencies. Staff of NCP mainly provided institutional support,vwhilst NSC and BSF were the key executing agencies. Whereas the NSC was responsible for seed supply to the collective sector, the BSF su-plied seeds mostly to the state farm sector. Of the 18 seed centers selected for upgrading under the project, 10 were operated and managed by NSC, and eight by BSF. The organizational arrangements have proven to be satisfactory and especially the strong central support from the PLG and the PMO has substantially contributed to making the project a success. In the future, however, the NSC would have to play a more active role to strengthen seed quality assurance aspects to upgrade performance to international standards. " Three of the ten NSC centers are in counties included in the then on-going IDA-financed North China Plain Project (Cr. 1261-CHA). 4 International procurement, despite being constrained by cumbersome procedures, was handled efficiently by the Chitna National Technical Import Corporation (CNTIC), as was the clearing and forwardirng of equipment and materials which was mostly done by the Chinese State Farm Agri-business Corporation. Project Implementation 10. Variances in Project Implementation. The stipulated project period was four years from June 1985 to June 1989. Although by the end of 1989, most physical targets were achieved, the project period was extended by one year to procure mainly equipment and materials, complete construction of the seed bases, and to allow for implementation of the training component, which did not proceed as scheduled due mainly to a lack of sufficiently qualified candidates with English language capability for study tours and overseas training courses. Besides the extension of the project period, some reallocation in the loan categories were made: first, in October 1988, in order to include funding for civil works, mainly for seed farm development from the unallocated category; second, in January 1989, in order to increase the training component, mainly from savings in the equipment, materials and vehicle component. Final adjustments were made to use the remaining unspent credit balance for the purchase of materials (mainly fertilizers), vehicles, spare parts and equipment. 11. Proiect Risks. The Staff Appraisal Report (SAR) did not anticipate any major risk, as the project involved proven seed processing technology already in regular operation in other parts of the world, and in view of the fact that a sound organizational structure for seed operation was already in place. However, the inability of the project management to adjust to a rapidly changing political/economical environment, as well as possible low adoption of improved self-pollinating seeds by farmers were not foreseen as risk factors. 12. Unforseen Factors Affecting Project Implementation. Unforseen at appraisal was the decision of the Danish International Development Agency (DANIDA) to support project activities by providing grant funds to NSC and BSF to the amount of Danish Kronor 9.8 million (US$1.3 million equivalent in 1986) over four years for overseas study tours, consulting services and training in the operation of modern production and processing facilities. The agreement between China and Denmark was signed on March 26, 1986. Subsequently, the project's training tdrgets were revised from a total of 983 to 1,380 man- months and technical assistance from 32 to 79 man-months (for details, see Part III/4). Project Results 13. The project has fully achieved its main objective of establishing a modern seed production, processing and distribution infrastructure in twelve provinces and two autonomous regions. As planned, all the 18 seed centers were modernized and expanded. The achievements of the various sub-components are as follows. 14. Buildings. The project provided for the construction and renovation mainly of processing and storage facilities (164,427 m2), laboratory and office buildings (50,001 m2) and staff housing (110,482 m2), amounting to a ) total of 324,900 m2. In addition, a lump sum allocation was provided for the construction of ancillary buildings and facilities, Construction tas generally implemented as planined (see Part 111/4). However, only 57,083 i 2 of staff housing were constructed, due mainly to a change in Government policy which gave greater autonomy to the seed centers but resulting in provisioln of lesser financial support to them, As a restult, investments, especially in non-productive assets such as staff housing, were curtiailed. 15. Seed Farm Development. Under the project, infrastructure on 28,000 ha of seed farms was to be improved by land levelling, construction of 1,547 km of irrigation and drainage canals, 480 km of rural roads, 422 m of bridges and the establishment of 170 wells and pumping stations. Although it was anticipated at appraisal that this sub-component would be completed by the end of PY3, less than 50% of the funds allocated were by then utilized, adversely affecting capacity utilization of the established seed processing lines. However, at project completion, actual achievement in terms of area to be improved and the total seed growing area has exceeded SAR estimates: SAR PCR Area to be improved 28,000 ha 34,000 ha Total area of seed farms 112,000 ha 134,000 ha The roads, bridges and pumping stations constructed under the project, even though they had fallen short of appraisal targets, met with actual needs. 16. Processing and Laboratory Equipment. At appraisal, it was estimated that a total of 32 processing lines, together with 45 individual processing machines (35 grain seed process.ng machines, 7 cotton seed processing plants and 3 machines for vegetable seed) for use at small farm sites would be required. The processing lines for rice, corn, wheat, soybean, and/or sugar beet seed were to have a collective hourly capacity of 52 tons of cleaned, treated and packaged seed. The total capacity of the 35 individual grain seed machines was to be 17 tons per hour (tph) of basic cleaning. The seven cotton seed processing plants were to have a total delinting/processing capacity of 15 tph and the three centers producing vegetable seeds were to be provided with equipment for extraction, drying, cleaning and packaging of vegetable seed, each with a capacity of 0.3 -0.5 tph packed seed output. 17. As against the above appraisal targets, 45 processing lines have been established, but individual processing machines procured number only 21. During implementation, it was decided to decrease the number of single grain seed processing machines and increase the number of processing lines, as the latter can: (a) produce higher quality seeds; (b) process seeds of different crops; (c) package processed seeds; and (d) facilitate handling of raw material. As a result, the collective hourly capacity of the processing lines has increased from 52 tons, as planned at appraisal, to over 67 tons per hour. Also, although the numbers of individual machines have been reduced, their collective output at 24 tph is higher than planned at appraisal, mostly due to the procurement of higher capacity machines (at equal or even lower cost) and/or locally-made adaptations. Cotton and vegetable seed processing capacities were installed as per appraisal estimate. In addition, two feed 6 lines with a total capacity of 8 tph and a fine rice line with 5 tph capacity, were installed. 18. Whereas it appears certain that full annual processing capacities can be reached for all processing lines, there is some doubt about the capacity utilization of the single machines whiclh are mostly used for the processing of conventional rice seeds. Farmers are not yet fully convinced about the benefits oF processed conventional seeds and still depend, to a large degree, on an exchange among themselves or their own reserves. Indications are that the demand for conventional rice seed was over-estimated at appraisal and that the seed companies are not making a strong enough promotional effort, due to the rather low profit margin. 19. From the commencement of the project, it took between two to three years before the processing lines became operational. This period could have been shortened if detailed engineering designs were prepared in advance and made available by the suppliers of processing equipment, the procedures for approval and acceptance of tenders were less cumbersome, and construction of buildings completed in a timely manner. In general, the type and capacity of machines installed has proven appropriate. Major problems arose only with the cotton seed acid delinting plants. Besides the poor performance of one supplier (see also para 39), operating experience necessitated the following changes: - enlarging of the neutralizer nozzle to allow entry of a larger volume of ammonia, in order to reduce acid concentration; - replecement of stainless steel pipes by PVC pipes to prevent corrosion; - reduction of conveyor belt angle to facilitate flow; - addition of locally-made centrifuge to those plants originally installed without centrifuges, to reduce residual acid and shorten drying time. 20. Although the supply of 3-4 years of spare parts were included in the tender, in some cases, essential spares were not provided by the supplier. Nevertheless, maintenance of the plants is satisfactory as arrangements have been made for local production of replacement parts and import of spares which cannot be produced locally. 21. Provision was also made for purchasing seed testing and office equipment for all 18 seed centers and SAR targets have been fully achieved. Minor problems arose with the instruments to analyse fibre quality, but these were resolved prior to project completion. 22. Farm Machinery, Vehicles and Materials. SAR targets were substantially exceeded, excepting for farm implements of which a total of 346 units (appraisal target of 478) were procured. This is due to the adjustment of procured numbers to actual requirements. As against this position, a total of 538 vehicles (SAR:340 units), 544 tons of agro-chemicals (SAR:333 tons), and 66,056 tons of materials (SAR:21,246 tons) were actually procured. The steep increase in the latter was due mainly to the import, in view of local supply 7 shortage, of an additional 38,349 tons of fertilizers out of exchange gains, in order to ensure adequate supply to seed farms. 23. Training and Technical Assistance. At appraisal, the overseas training programme gave emphasis to crop improvement and breeding. During implementation, the focus shifted partly to seed processing and testing, farm machinery and vehicle operation and maintenance, utilizing 75 man-months. Total overseas training amounted to 108 man-months. The shortfall against the revised target of 312 man-months was due mainly to a lack of sufficiently qualified candidates with English language capability. Only 666 man-months, of the 1,000 man-months allocated, were utilized for local training. This is due mainly to a substantial reduction in the training imparted to machinery and vehicle operation and maintenance staff (from 600 to only 56 man-months), based on an assessment of actual requirements. The study tour component was fully utilized and found to be particularly useful. Throughout the project period, there was a remarkably low degree of staff turnover and practically all the staff trained continue to work for the project which together have contributed to its success. 24. As a result of the DANIDA support to the project (see para 12), the technical assistance (TA) component was also increased from 32 man-months to 79 man-months, of which 49 were utilized. The main reductions occurred in the fields of seed testing (12 against 24 man-months) and assistance for establishing virus-free nurseries for fruit trees and potatoes (4 against 16 man-months), as actual requirements were sufficiently covered. The inclusion of assistance for establishing virus-free fruit tree/potato nurseries, in fact replaced the assistance to NSC, originally planned at appraisal for development of degree programmes in seed science and technology at four agricultural colleges (viz. Shandong, Zhejiang, Narjing and Northwest). In spite of this change in TA allocation, both Shandong and Zheijiang colleges have developed courses on seed technology. 25. Studies. In accordance with a covenant of the Credit Agreement (see Part III/7), the Government submitted to the Bank, a report on "The China Seed Industry and Markets", incorporating the main findings of a number of studies on seed supply and demand, marketing and prices, quality assurance and control procedures. Although generally well-prepared, the report suffered from analytical weaknesses thereby reducing its usefulness for planning purposes and for purposes of designing a second phase project. It has provided, however, a good basis to PMO for future continuous monitoring and evaluation of the supply and demand situation, seed prices and quality. 26. Economic Rate of Return (ERR). The ERR for the project as a whole is re- estimated at 72%, compared to the appraisal estimate of 38% (see Part III/6B and Table 1). The difference is due mainly to the installation of additional seed processing capacities which would result in higher than anticipated output, mainly of processed hybrid rice seed, and consequent large increases in paddy production (see Part III/6A). 27. Financial Rate of Return (FRR). At appraisal, the FRR for the project as a whole was estimated at about 12%, with FRR's ranging between 8% to 17% for individual seed centers. Data to re-estimate FRR for individual seed centers were not available. The PMO, however, had prepared cost/benefit streams 8 covering production/processing of major seed categories with FRRs ranging between 3 and 13% (see Part III/6C). Consolidating these data, the FRR for the project as a whole has been re-estimated at 8% (see Table 6E). The main reason for the lower than anticipated financial returns is the prevailing seed price policy. At appraisal, Government had assured the seed centers that retail prices for their fully processed seeds would be set at least 20% to 30% above full production cost. This, however, did not materialize and margins for major seeds such as corn, hybrid rice and cotton were only 13%, 14% and 10% respectively and for conventional rice seed, 12%. Only for the wheat seed, the margin available to seed centers at 21% exceeded the lower limit of 20%. A more realistic price policy will be needed to ensure financial viability of the seed centers and to permit them to create adequate reserves for maintenance, repairs and replacement. 28. Seed Supply and Demand. At present, supply of quality seed meets demand for most crops. Full capacity utilization, however, has not yet been reached and a more active marketing strategy will have to be pursued to stimulate demand. Presently, processed seeds are sold to farmers either directly by the companies' distribution outlets (sales departments) or through the intermediary activities of the extension service. These outlets are mostly located at county level and some at the township level; none, however, in smaller towns or villages. There is also no integration between the supply of seeds and other modern inputs such as farm chemicals and fertilizers. To improve marketing services, the distribution network would have to be expanded at township and village levels and, if possible, combined with the provision of related inputs and services. Also, on-farm demonstrations to spread knowledge of the advantages of using processed seed vis-a-vis non-processed seeds would need to be considerably expanded, in order to increase market potential for quality seeds. 29. Proiect Impact. The project has contributed to increased production of high quality seeds of major crops such as rice, corn and wheat and cash crops such as cotton, vegetables and sugar beet. The use of quality seeds has resulted in the adoption of lower seed rates per hectare and hence saving of seeds; higher seed germination rates and survival of seedlings and higher crop yields and production. Estimated crop yield increase of processed seeds over unprocessed seeds is indicated below: Crops: Hybrid Conven- Hybrid Wheat Soy- Cotton Vege- Sugar rice tional rice com beans (lint) tables beet Kg/ha: 316 251 233 257 262 66 3,100 3,000 30. At appraisal, it was estimated that, as a result of the project, annual incremental production would include about 110,000 tons of rice, 160,000 tons of corn and wheat and over 60,000 tons of cotton. Due to the increase in processing capacity (see para 6.5) which is being mostly utilized for processing of hybrid rice seed, incremental rice production at project closing has been estimated at over 750,000 tons and is expected to reach up to 930,000 tons at full development (1996). Corn and wheat production is expected to closely reach appraisal estimates. However, incremental cotton production will only be about 20,000 tons per annum or about one-third of what was estimated at appraisal (see Part III/6). The main reason is that assumptions on yield increases for cotton at appraisal were over-optimistic. 9 31. Another significant impact of the project is that it has improved the technological environment by introducing modern seed processing technology, strengthening the public sector seed production and processing infrastructure, and contributing to human resource development through in-service and fellowship training. The social benefits, resulting from increased productivity at farm level would also be considerable. Proiect Sustainabilitv 32. The project has successfully established a public sector seed production and distribution system. Marketing and pricing problems, however, affect the profitability of che seed industry. Some seed centers took up non-generic activities such as contract transplanting or hiring of earth-moving equipment to improve their cash flow and .o ensure better returns on project investments and to facilitate loan repayment. In order to make the seed industry more cost-effective and financially viable, seed demand would have to be stimulated (see para 28) and seed companies would need to be given greater autonomy in determining selling prices which should not only cover the costs of seed production, processing, storage and distribution but also provide for maintenance, repairs and replacement of machinery and equipment (para 27). 33. Another area of concern is the unreliable supply of agro-chemicals and fertilizers needed for seed production. Efforts, however, are underway to improve the production and distribution of agro-chemicals and fertilizers. Furthermore, the Government has decided to maintain the PMO in the future on a permanent basis to provide continuous guidance and support to the seed centers from the central level. In this situation, the project is likely to maintain an acceptable level of net benefits throughout its economic life. Bank Performance 34. The Bank's performance throughout the project cycle was satisfactory. At appraisal, however, more attention should have been paid to changing requirements in management, as a result of the inclusion of the seed processing sector in the production responsibility system (PRS),tand the shift from brigades to individual households which presents a much more complex marketing task. A total of five supervision missions were fielded between October 1986 and August 1990, relatively few in comparison with other Bank-financed projects, but considered adequate in view of the close supervision given by PMO and its good performance in project implementation. 35. The main lessons learned from the implementation of the project that may be relevant to other Bank-financed projects are: (a) in planning seed development, the importance of on-farm production, retention, and farmer-to-farmer exchange of seeds, particularly for conventional rice, needs to be recognized (para 18); Production Responsibility System is a generic name for various contracting arrangements designed to link incomes and rewards more directly with the efforts of individual producers. 10 (b) seed prices have to be set adequately high, to reflect all investment and operational costs, including depreciation, to ensure financial viability of the investment and sustainability of the operation (para 27); and (c) an effective marketing strategy involving widely spread distribution network and integration with supply of related inputs and services, including on-farm demonstrations, is essential to ensure demand-driven production of high quality seed (para 28). Borrower Performance 36. The borrower performed well from identification through implementation. The PMO was very effective in coordinating project activities and both the BSF and NSC, which were to set up respectively eight and ten seed centers, performee equally well. However, seed quality assurance and control aspects should have been further enhanced, and management did not always succeed in adjusting to the changes in the socio-economic environment requiring a more innovative and progressive approach. Government's failure to adopt a financially sound seed pricing policy has placed the financial viability and sustainability of the seed industry in jeopardy. 37. The lessons to be learned by the Bank mentioned before (see para 35), in principle also apply to the Borrower. Additional lessons of experience for the Borrower are: (a) Strong central support and guidance and staff continuity are essential for successful project implementation (paras 9 and 23). (b) Procedures for approval and acceptance of tenders have to be streamlined to reduce start-up periods (para 19). (c) Tender documents should oblige the successful bidder to supply detailed engineering designs prior to delivery, to allow timely construction of associated civil works and facilitate installation of equipment (para 19). Prolect Relationship 38. The relationship between the Borrower and the Bank was good and effective. Supervision missions were always fully supported and information was provided in a satisfactory manner. At the Borrower's request, the project period was extended by one year and IDA swiftly authorized the extension, thus, allowing uninterrupted disbursement from the project credit. The relationship between the Borrower and DANIDA, which provided supplementary funding for training and technical assistance, was also good and effective throughout the grant period of 1986 to 1989. 11 Consulting Services 39. Consulting services provided under the IDA credit and supplemented by a DANIDA grant (see paras 12, 23 and 24) were found satisfactory and useful. The performance of contractors supplying equipment and material was generally satisfactory, although initially a number of installatioi and performance problems occurred which delayed commissioning of processing Iines. The only major problem arose with the supplier of the cotton acid delinting equipment. The performance bond had to be withheld and the concerned seed centers had to make numerous engineering adjust[nents and repairs to make the plants operational. Project Documentation and Data 40. The SAR and the Development Credit Agreement (DCA) which contained covenants for the disbursement of the IDA credit, as well as the agreement (signed on 26 March 1986) between the Government of the Kingdom of Denmark and the Government of the People's Republic of China, which covered parallel financing of additional technical assistance and training needs, were all well prepared and provided a useful framework for the Bank and the Borrower as well as DANIDA, to monitor implementation progress. 41. The PMO prepared a comprehensive ex-post evaluation report of the project (para 42), providing most of the data required for the preparation of the PCR, and the PMO as well as the BSF and NSC were cooperat ve in providing additional data and making arrangements for field visits needed for preparation of the PCR. 12 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 42. We have no objection on the Project Completion Report (PCR) of China Seeds Project prepared by the Cooperative Programme mission of FAO. Project Implementation and Results 43. China Seeds Project was examined and authorized as one of China's second agriculture project group financed by World Bank in April 1983. The China's State Planning Commission (SPC) approved the feasibility study report of this project on March 16, 1985. The Bank's Executive Directors approved of a Credit of SDR 41.7 million (US$40 million equivalent) for China Seeds Project on April 11, 1985. On September 2, 1985, China government ratified the Credit Agreement on China Seeds Project. The Transfer Credit Agreement was signed by the National Agriculture, Industry and Trade Corporation (AITC), on behalf of Ministry of Agriculture (MOA) with provinces/regions in September 1985. On October 31, 1985, China Seeds Project went into effect. It was planned to end on December 31, 1989, but due mainly to the situation of project construction and use of the Credit, the project's implementation period lasted one year longer and ended on December 31, 1990. 44. From 1985 to end of 1990, the total investment of Seeds Project was RMB 343.73 million (US$91.439 million equivalent). It was made by Bank loan US$51.811 million (RMB 198.93 million equivalent) which accounts for 57.9% of the total investment, and domestic fund RMB 144.8 million (US$39.628 million equivalent) which accounts for 42.1%. On December 21, 1990, the Bank credit has been fully disbursed in advance, the special account was closed on the same day. Calculated in RMB, 125.8% of the domestic fund and 151.6% of the total investment have been put in, compared with the correspondent targets stipulated in SAR. The whole capital was scattered tc: buildings, RMB 70.067 million, accounts for 20.4%; farmland construction, RMB 51.189 million, accounts for 14.9%; the procurement of facility and materials, RMB 220.4 million for 64.1%; training and consultants, RMB 2.078 million, accounts for 0.60%. Calculated in US dollars, 108.7% of the total investment has been put in, compared with the target stipulated in the SAR. 45. During the five years of implementation, 18 seed processing centers and 74 seed bases have been set up in 14 provinces/regions. To the requirement of SAR, the bases and centers have been formed with a complete set of seed production, seed processing, transportation and storage, and marketing. The seed bases are located in widely differing agro-ecological zones. The main crops concerned are: paddy rice, wheat, barley, corn, bean, cotton, rape, sugarcane, beet, tomato, various fruits, etc. 46. Supporting infrastructure of land leveling, soil improvement, irrigation system has been completed. 133,900 ha of various seed fields have been built up which makes up 110.8% of the appraisal plan. In 1990, 293,000 tons of various seeds have been produced, including 127,000 tons of hybrid rice seed, 41,000 tons of hybrid corn seed, 62,000 tons of wheat seed, 36,000 tons cotton 13 seed, 21,000 tons of conventional rice seed, 2,500 tons of vegetable seed and 73,000 tons of potato seed. 210,000 tons of these seeds have been sold directly by project agencies. The seeding area is 4,217,000 ha, which is 131.5% of the target stipulated in the SAR. During the period of project implementation, 238 kinds of various qualified seeds have been introduced. After testing, 147 of these have been reproduced and disseminated. 47. Thirty-four modernized seed processing plants with 80s' upgrading technology have been established. Forty-three sets of seed processing lines, 16 seed processing workshops, and 21 individual machines have been established. The collective hourly capacity of processing lines is 78 tons, and as a result, the yearly capacity is 78,900 tons. The collective hourly capacity of individual machines is 24 tons, so the collective yearly capacity is 20,000 tons. In the working season of 1990 to 1991, 103,000 tons of various seeds have been processed at its full capacity. But only 50% of the sold seeds are processed. The introduced facility operated well, due mainly to the advanced specification and high quality performance. The quality of processed seeds has enhanced. Compared with unprocessed seed, the output increased by an average of 5%-10% per mu with processed seed, while 3-5 kg seeds can be saved. Farmers can increase the output and enhance their income notably by using processed seeds. Project Construction 48. There are 150 seed warehouses, 50,000 sq m with total capacity of 50,000 tons of seed; 15 low temperature and humidity warehouses, 4,253 sq m with total capacity of 4,500 tons; 97,000 sq m of sunning ground; 59 laboratories and testing rooms equipped with 25 whole sets of seed testing facility, 544 individual sets and 139 staff; 69 seed sales departments with an area of 14,000 sq m and 320 staff; 29,000 sq m of office area; 57,000 sq m of living rooms; 538 various vehicles including 462 trucks with a total capacity of 1,819.5 tons. Farm machines, chemical fertilizer and pesticides have been procured. All these seed warehouses, sunning ground, laboratories, departments and vehicles, etc. of seed bases have been playing a supporting role in the construction of seed fields and seed processing plants. So it has guaranteed the seed transportation in time, seed storage, drying, processing, testing and marketing. The quality of the seed has been improved effectively. The seed production potentiality has been brought into its full play so as to serve for increasing agriculture production. Training and Consultants 49. All the training and consultants are combined with the activities of project construction and bidding procurement, etc. Under this project, 32 domestic training courses, in which 1,051 man-month attended, have been held. 1,123 persons took part in 28 various specialized conferences. Thirty-two training groups, which collectively comprised 155 months, have been sent overseas. Fifty-one man-month international consultants have been invited to China. The Danish government provided 9.8 million Danish Kroner technical assistance (TA) for the Seeds Project. The following items were provided by this TA: 11 training groups of 43 man-month collectively; 3 studying groups of 17 man-month collectively; 14 consultant groups of 38 man-month 14 collectively; 18 domestic traininrg courses which 560 man-month took part in. The Sino-Danish Seed Development Project: has cultivated a n tmber of experts for project management. equipment construction, etc. All these people have been the backbornes in project units at different. levels. That is a great finding we got through the TA for the implementations of other agricultural projects financed by the Batik. Benefit 50. Since the project implementation, it is the social benefit that is most remarkable. Project units operate profitably. From 1991, the incremental output of various crops by using processed improved seeds are as follows: 115,000 tons of corn and wheat, 478,000 tons of rice, 15,000 tons of delinted cottoni, 270,000 tons of beet, 330,000 tons of potato. The annual incremental value is RMB f2D million. 51. Project financial benefit: The total profit of 20 financial items of all the project units will rearh RMB 912 million in 30 years. Eleven items, RMB 394 million are from seed production, processing and sales, account for 43.2% of total; the other nine items, RMB 528 million are from the sideline of seed production, account for 56.8%. The Financial Rate of Return (FRR) of this project is 14.529%. The Economic Rate of Return (ERR) of this project is 18.56%, excluding the benefit of incremental output from the diissemination of improved seed planting. The pLoject units have the ability to repay the principal and interests of the credit at present. Evaluation, Findings and Conclusion 52. Evaluation. Through five years of implementation, various construction of China Seeds Project has been completed, the objectives of the project have been achieved. Seventy-four modern seed bases weri established in 18 seed centers located in 14 provinces/regions, dealing with seed production, processing, storage and transportation, tesfing and marketing. The total production, processing and sale voiume of seeds of main crops increased greatly. The seed quality has been improved significantly. All these make it possible to meet the requirements of agriculture production. There are a great number of seeds that are sold to non-prDject area every year and are warmly welcomed. 53. The social benefit of this project is significant. The project units win their reputation year by year. At present, the benefit gained from seed production, seed marketing, etc., every year can be used to repay the principal and interests. Also the benefit brings better working and dwelling conditions for project staff. The economic sustainability of project units is enlarged. During its construction and implementation, the progress of all aspects is smooth and successful. 54. Findings. The Seeds Project is a relatively complex foreign capital investment project with several systems work4ng together and much more provinces involved in. The project units are scattered widely. Seeds Project Leading Group (PLG) with three components (National Seed Corporation, State Farm Bureau, and North China Plain Agriculture Project), led by State Farm 15 Bureau and Seeds Project Office, are formed under MOA. The implementation of this project is well organized. Local leading groups and project offices at different levels are also organizedI subsequently. From the very beginning of the project implementation, management organization is well formed, project staff in their position are playing various roles in the project. The leading operating system that was formed by center and local levels are united, effective and cooperative. That is the key point for the success of the project. 55. Fulfill every task by adhering to the SAR. Tasks and goals stated in the report are designed and confirmed by the Bank, which are a combination of the national condition with general standard in developed countries regarding seed production, processing, quality control and marketing. It is the only way to realize "seed modernization" in the aspects of seed production, breeding, processing, storing, testing and marketing to fulfill the targets in SAR and, thereby to improve the quality and quantity of seed to a higher level. 56. It must be combined with the standard of local agricultural production and technical level, social economy, as well as financial and managerial status of the project units when making decisions stressed as follows: construction scale, amount of loan, t3tal investment, technical introduction, and equipment selection. It is very important to ensure the stability of the project units. This principle may bring construction going smoothly after the identification of project component and also may reach design scale and bring great social and financial benefits after construction. 57, The equipment, facilities, vehicles, farm machinery and various materials for project construction should be procured in a manner which can make the investment yield well. 58, More attention should be made to the project management and personnel training. The project management ought to be enhanced to a higher level which will bring greater project benefit. Based on the perfect management organizations at different levels, the organizations of production operation, marketing and management should be set up in time to meet the requirements of project construction and development. The emphasis of management should be put on increasing the seed processing output, improving the seed quality, winning steady reputation, developing market, improving the quality of project staff through training. So that all project staff work actively, initiatively and creatively, the project production management and operation levels will bring to a new era, greater benefit will be achieved. Problems and Sugzestions 59. Compared with developed countries, the standard of technology, operation and management of some project units in seed production, processing, storage, testing and marketing is lower. In the coming years, we should work hard, try to improve, and make them perfect. That is the way to catch up with the international advance standard. 16 60. The equipment, vehicle, material maintenance rule has not been set up in some project units. In these project units, no special person was assignod to check the equipment at regular basis, even worse, some of the equipment are rusty or damaged. These units are asked to check out and make a detailed li'2- of its property, including various equipment, vehicles and materials, Ihe tesponsibility system for equipment maintenance should be formed. 61. Facility, vehicle and farm machinery imported in the project have been used for four years and the spare parts need to be replaced. Some of the spare parts procured with machines have been used. A batclh of spare parts has been procured just before the end of project. Some of the spare parts will be provided by project units themselves. The equipment maintenance is quite important for machines to serve longer. Some of the imported facility or spare parts can be substituted by domestic products. Through technical transforming, some products can be made domestically. For the spare parts that have to be imported, arrangements should be made to import them early. 62. With completion of the project construction, the project goes into its full development period. There are many works to be done in this benefit- yielding period. In order to create the best result and gain the greatest benefit, the key factor is to improve the project staff's working ability, qualify them with modern science, technology and self cultivation of special technology, management and operations, etc. If resources, technology and personnel can be combined coordinately, the working standard of production, management and operation of seeds bases will be raised. More quantity and higher quality seeds of various crops will be produced to meet the requirement of agriculture development. Conclusion 63. Seed bases have been planned and modernized seed centers have been established in a relatively short period of time. It plays an effective role in dissemination of improved seeds, improving seed quality, enlarging seed quantity and prompting the increase of agriculture production. The establishment of modern seed processing plants brings about 5%-lO% increase in seed production and so taps the seed production potential. This project is only a one time investment which will bring long-term benefit and produce quick results. It is a kind of measure of "develop agriculture by science and technology", which is warmly welcomed by farmers. The social benefit of this project is remarkable. With government preferential policy, the principal and interests can be repaid with the benefit of the project itself. Comments on Part i 64. We agree on the project review and evaluation summary. The following are a few modifications to the concerning data: a. "Project Results" in the "evaluation Summary": "78 seed bases" should be "74" for 2 of them belong to 2, or more than 2 seed centers. Actually, it is 1. b. "Technical Training and Consultants", see Part II (para 65 a) 17 c. "Incremental rice production at full development, see Part II (para 65 b) d. The success of Seeds Project is closely connected with the support, help, supervision and guidance of the Bank. e. The Bank selecting Seeds Project as the second package of agriculture development project shows its support to the modernization of agriculture in China. This project meets the requirement of sustainablo agriculture development and sets an example for modernization of seeds industry in China. It also benefits the farmers. f. The appraisal report of the Bank on Seeds Project is both scientific and conforms to tn.e reality in China, and can be used as a guidance for Seeds Project. g. During the five years of implementation, Mr. Joseph Goldberg, Chief, Agriculture Operations Division, China Department, Mr. William Smith, former Chief of same division, and also officers involved in the project, especially Mr. W.P. Ting (Senior Agriculturist), Mr. James Goering (formerly in RMC), and Mme. Nancy Hwang (Senior Disbursement Officer, Asia Disbursements Department) have all given great help to identification, evaluation, procurement, bidding, evaluation of tender, importation of technology and equipment, signing and implementation of contract, loan disbursements, credit adjustments, supervision and evaluation. For several times the officials of the Bank have brought to us the advanced technology and management experiences in the world, helped to find collaborators and introduced concerning guidance, regulations, rules and procedures of the Bank which ensured the smooth implementation of the project and helped to train a number of technical staff specializing in project management, seed production, processing, testing and marketing management. h. It has taken eight years from preparation of this project to completion. During this period, great changes have taken place in agriculture production and the project areas. With the introduction of Production Responsibility System (PRS) in seed industry and increasing commodity rate of agro-products, the rural market and farming system have changed a lot which could not be anticipated at appraisal. However, during the implementation, the Bank has allowed some adjustments according to the situation in China. These included appropriate scattering of project areas, reducing size of processing equipment, allowing the contract of seed farms by individual household, increasing the supply of fertilizer and agro-chemicals to seed growers, allowing development of hybrid rice seeds in rice production areas, improving the storage and transportation capacity during the seed procurement and marketing process and increasing market spots in rural areas. These adjustments, agreed by the Bank, helped seed centers and bases in the project become modernized seed production bases for agriculture development in China. i. At present there are few farmers who still have not recognized the benefit of processed quality seed of all crops in increasing production, mainly because modernized seed processing industry has just been established in China in recent years and farmers lack of experience in it. A great amount 18 of demonstrations and extension are needed. The success of this project, especially the establishment of modern seed processing industry laid the basis for demonstrations and extensions in a larger area. Through selling the processed quality seed produced by seed production bases to farmers can help them gain personal knowledge of the benefit of the processed seed. It is proved by the increase of production and sales volume of processed quality seed produced by seed production bases in recent years: for example, the annual sales of processed quality cotton seed from 1987-1990 is as follows: 2,994 tons (1987), 9,663 tons (1988), 15,586 tons (1989), and 28,096 tons (1990). If there was no modern cotton seed delinting processing factory, the drastically increased demand of farmers could not have been met. Demonstrations and extensions need to be strengihened, so that the quality of processec seed of other crops can achieve the same results as that of cotton. Comments on Part III 65. The following are some modifications to the data in Part III, others are correct. a. The training and consultants in Part III (4), "Project Implementation" only reflect part of them, which are based on data provided by DANIDA, while the others are excluded. The accurate data is stipulated in part II (para 49). b. Part III (6), "Project Results": The data of "Incremental Crop Production" and "Estimate at Full Development" in Table A, "Direct Benefits", should be the estimated data at the end of project, which is relatively reliable (see part II (para 50). c. Part III, ERR in Table 6C, "Economic Analysis" is 72.01% which is relatively high because it includes the benefit from the incremental crops output brought by diss3minating processed seeds. In Part II (para 51), ERR is 18.56% which excludes the counterpart mentioned above. The ERR of this project is about 50% according to adjustment in Part IL, (para 65b). d. We agree on FRR of 8% in Table 6E, "Financial Analysis". However, every project provinces/regions (except for Jiangsu Seed Company) has done their own analysis on FRR, which is 12.7%-21.4%. According to the estimation of the Project Office, the FRR is 14.6% which includes returns of project unit other than from seeds. Function of Borrower 66. Starting from preparation to completion of the project, the Chinese government (at all levels) paid a great attention to the project. The government has provided all kinds of support and assistance in the area of approval of the project, providing iocal counterpart fund, conditions and terms of the credit, requisition of land, importation of technology and equipment, overseas study tour, taxation, seed pricing, and repayment of loans which ensure the success of the project. 19 67, The project has also received support and help from State Planning Commission, Ministry of Fir nce, Auditing Administration, Ministry of Foreign Economic Relations and Traue, General Customs Administration, Machinery and Electric Equipment Import Approval Office of State Council, Ministry of Chemical Industry, Bank of China, and other concerned ministries. 68. The MOA carried out well all the responsibility during the project preparation and implementation, which ensured the smooth implementation of the project. Based on the decision of MOA, the PLG made a good performance in decision-making, supervision and coordination in project implementation. Under the leadership of PLC, the Project Management Office (PMO), together with PMO at all levels, worked hard to implement the project successfully according to the requirements of SAR. 69. The study on the "China Seed Industry and Markets" needs to be further carried out. Since the report was finished in 1988 when the project was still in the process of implementation, it was hard to estimate and analyze the impact of modernized seed industry on marketing, production, pricing and quality control of seed at that time. It can only be carried out after completion of the project to evaluate the present work and provide guidance for future work. The same applies to seed pricing. Only after establishment of seed processing factory and its capacity reaches a certain standard, can we arrive at a reliable and scientific cost which provides basis for the national government in deciding practical seed pricing. The seed distribution system and seed quality control system in rural areas need further study. Though we need to learn from foreign experiences, we should suit the situation in China and at the same time develop with the modernization of rural economy. The completion of the project laid the basis for the study. 70. The cooperation between the Bank and Seeds Project Office is successful and achievement is remarkable. We hope the cooperation cat be further developed. Relations with Other Agencies 71. The project also obtained assistance from the Danish Royal Government. DANIDA has granted the project with technical assistance mainly used for training of technical and management staff, study tour and technical consultancy. The assistance to the project provided by Danish government through Danish Agriculture Consultants Company is very successful. The staff trained by' Danish TA has become the backbone in project implementation and management. Now the staff plays a very important role in the seed bases, processing factory, testing laboratory and management institutions. Foreign language training should be taken in advance in order to meet the requests of overseas training. 72. The project obtained help from concerned companies, institutes and universities in the US, Japan, West Germany, Denmark, Canada, UK, Switzerland, Australia, and Italy. These institutions provided a large amount of technical materials to the project, held technical conferences, introduced advanced technology and equipment, helped established seed processing factories and laboratories, provided spare parts and received and accommodated training and 20 study tours. Although we have had some unhappy experiences with some companies, we stuck to the principle of friendship, consultation, equality and mutual benefit. We managed to overcome the difficulties brought by some companies. We welcome everybody, who have helped the project to China again and hope to continue to get help from them. 73. The international procurement of equipment was handled efficiently by International Tendering Company of China National Technical Import Corporation (CNTIC). The procurement of all the modern equipment, instruments, vehicles and materials for the project were very well organized by CNTIC and the bidding, procurement, supply, installation, operation, claiming damages and technical services was also very successful. CNTIC has passed on information on a timely basis between suppliers and buyers and helped solve the dispute between them which enabled the successful execution of the large supply contracts. However, the process needs to be improved in future procurement and contract implementation to ensure that all the suppliers efficiently fulfill their obligations specified in the contract and avoid some suppliers from finding excuses to refuse to fulfill the contract. 21 PART III - STATISTICAL INFORMATION 1. Related Bank Credits Loan/Credit Purpose Approval Status Comments Title Date 1/ North China Plain Project To improve 200,000 ha in three provinces 6/82 Completed Project supported inter alia (Cr.1261-CHA) affected by salinity and waterlogging (12/87) three seed companies in the through provision of drainage and project area. irrigation. Heilongjiang Land To develop 200,000 ha for production of 4/83 Completed Project included provision of Reclamation Project foodgrains and soybeans including land (3/89) eight processing plants (ranging (Ln.2261/Cr. 1347-CHA) reclamation and drainage, provision of farm 4-6 t.p.h) and five smaller machinery and technical assistance. plants for upgrading of seed production and distribution. Pishihang-Chaohu Area To increase crop production in Anhui 6/85 On-going Project includes expansion of Development Province, mainly through improvement of (6/92) seed breeding facilities and (Ln.2579/Cr. 1606-CHA) irrigation and strcngthening of support upgrading of seed processing services. equipment and bulk storage. Northern Irrigation To rehabilitate and complete irrigation and 3/88 On-going Project included the upgrad-ing Project (Cr.1885-CHA) drainage systems serving about 250,000 ha (12/95) of a seed station and the in Nei Manggol and Ningxia, including the establishment of nurseries. provision of infrastructure and support services. Shaanxi Agricultural To boost farm production and incomes 3/89 On-going Project includes the construc- Development Project through investments in irrigation, rural (6/95) tion of nine seed processing (Cr. 1997-CHA) infrastructure and agricultural services in and certification plants together 39 counties of Shaanxi Province. with modern pro-ceasing and testing equip-ment. Shandong Agricultural To improve crop and animal production 5/89 On-going Project includes upgrading of Development Project and coastal fisheries in the Shandong (12/94) twelve county seed compa-nies (Cr.2017-CHA) Province. through provision of buildings, machinery/ equipment, training and working capital. Hebei Agricultural To increase production, productivity and 6/90 On-going Project includes upgrading and Development Project marketability of agriculture, livestock and (12/96) strengthening of 18 seed farms (Cr.2159-CHA) aquatic products in the Northeast and and 17 ginneries, also Hailongang areas. introducing acid delinting technology. Middle Yangtze Agricul- To increase production and marketing of 8/90 On-going Project includes the esta- stural Development Project fruit in the poor areas of Sichuan and (12/95) blishment of nurseries and (Cr.2172-CHA) Hubei provinces. budwood-mother orchards. i/ Figures in brackets indicate the actual or expected closing date. 22 2. Project Timetable Itecm Date Planned Actual Date Preparation (prc-apprai4al) May 1984 May 1984 Appraisal mission August 1984 August 1984 Credit negotiations February 1985 March 1985 Board approval Marsh 1985 April 1985 Credit signature May 1985 Credit effectiveness October 1985 Project completion June 1989 June 1990 Credit closing Decembcr 1989 December 1990 Credit completion December 1990 3. Credit Disbursements Cumtulative Estimated and Actual Disbursements in US$ minllion IDA Fiscal Year 1986 1987 1988 1989 1990 1991 Appraisal estimate (USS) 6.0 22.0 36.0 40.0 - - Actual (US$) 4.3 a/ 28.8 33.3 42.2 50.8 52.0 b' Actual as % of estimate 71 127 91 105 127 130 Date of Final Disbursement: December 21, 1990. a/ Represents initial deposit into the Special Account. b/ An IDA credit of SDR41.7 million was made available, which at the time of appraisal was equivalent to US$40.0 mnillion. Due to the deterioration of the US$ against SDR over the project period, the USS equivalent increased to US$52.0 mnillion, which was entirely disbursed. 4. Project Implementation Key Indicators Unit SAR Actual Target Achievement Buildings Processing and storage mn2 164,427 175,218 Laboratory and office buildings 50,001 49,202 Staff housing 110,482 57,083 Ancillary buildings lump - 73,218 sum Seed Center Development Land levelling and improvement ha 27,974 34,750 Irrigation & drainage km 1,547 2,017 Roads km 480 437 23 Unit SAR Actual Target Achievement Well/pumping stations no. 170 68 Bridges and culverts m 422 202 Seed Processing Equipment Lines set 32 45 Single no. 45 21 Fann Implements Tractors no. 114 57 Cultivators/laqd 1 -vellers no. 176 69 Harvesters no. 49 28 Irrigation equipment no. 57 16 Others no. 82 176 Vehicles Trucks (5-10 t) no. 153 254 Pick-ups (0.5 to 1.75 t) no. 104 150 Vans/buses and other no. 83 124 Seed Inspection and Testing Equipment Sets set 25 25 Materials Steel MT 5,539 12,000 Fertilizers MT 15,707 54,056 Pesticides MT 333 544 Others lump - 1,201 sum Training and Technical Assistance Overseas training m-m 326 (312)" 108 Local training m-m 600 (1,000) 666 Study tours m-m 57 (68) 67 Technical assistance m-m 32 (79) 49 i/ Figures in bracket indicate revision of targets, as a result of DANIDA support. 24 5. Project Cost find Financing A. Project Cost Appraisal Estimate Revised Estimate i/ Actual Local Foreign Total Local Foreign Total Local Foreign Total .( S$ m ilin..................................................................... (U S$ million) Buildings 18.0 2.0 20.0 17.8 1.8 19.6 17.5 1.6 19.1 Seed farm 12.9 2.3 15.2 10.9 1.9 12.8 9.9 1.7 11.6 development Processing and 2.1 18.8 20.9 1.8 16.5 18.3 2.2 17.3 19.5 laboratory equipment Farm equipment 2.4 13.3 15.7 2.5 14.1 16.6 7.0 33.6 40.6 and materials Overseas and local 0.1 0.8 0.9 0.1 0.8 0.9 - 0.5 0.5 training Technical - 0.5 0.5 - 0.5 0.5 - 0.1 0.1 assistance BASE COST 35.5 37.7 73.2 33.1 35.6 68.7 - - Physical 1.9 2.8 4.7 0.3 0.5 0.8 - contingencies Price contingencies 4.3 4.6 8.9 1.6 1.7 3.3 - - TOTAL 41.7 45.1 86.8 35.0 37.8 72.8 36.6 54.8 91.4 1/ Revised June 1987, based on 1985 to March 1987 actual cost at the exchange rate of Yuan 2.8 = US$ 1.00 and the estimated remaining project cost from April 1987 to end-1989 calculated at the exchange rate of Yuan 3.7 = US$ 1.00. 25 B. Project Financing Source Planned rFil US$ million (%) US$ million (M) IDA (Total) 40.0 46 52.0' 57 - Equipment, materials anti vehicles 32.9 38 46.6 51 - Training 0.7 1 0.6 1 - Consultants' services 0.4 - 0.1 Special account 4.0 5 4.7 5 - Unallocated 2.0 2 - DIOMESTIC 46.8 54 39.4 43 TOTAI, 86.8 100 91.4 100 1/ An IDA credit of SDR41.7 million was made available, which at the time of appraisal was equivalent to US$40.0 million. Due to thc deterioration of the US$ against SDR over the project period, the USS equivalent increased to US$52.0 million, which was entirely disbursed. 6. Project Resuits A. Direct Benefits Appraisal Estimate at Estimate at Estimate Closing Date Full Development A. Incremental seed production (tons) Rice 14,570 64,322 79,138 Other grains 58,533 42,186 49,059 Cotton 1,547 25,688 35,000 Sugar beet 3,111 1,350 5,000 Vegetables 981 2,500 3,000 Potatoes 100,500 73,612 80,000 Sugarcane 33,040 19,250 23,000 Fruit trees: - '000 scions 6,809 n.a. n.a. - '000 seedlings 2,500 288 288 B. Incremental Crop Production (tons) Rice 110,000 753,500 930,000 Corn and wheat 160,000 120,000 140,000 Cotton 60,000 13,750 19,250 Potatoes n.a. v 331,000 600,000 Sugarcane n.a. 34,000 41,000 Sugar beet n.a. 270,000 900,000 v The SAR provides only data on area to be planted with improved seeds but no data on incremental crop production. B. Economic Impact Appraisal Estimtate PCR Estimate Economic Rate of Return: Project as a whole 38% 72% Conunents: The economic re-evaluation has been carried out in 1990 constant prices. For intemationally traded commodities, the projected 1995 prices expressed in 1990 constant value based on the World Bank Commodity Price Forecast were used. The actual investment and operating costs were adjusted to 1990 constant value using CPI. Specific conversion factors were used for locally-manufactured machinery and equipment (1.5), steel (1.90), earthworks, irrigation (0.79) and structu:es (1.02). Other local cost and prices of non-traded commodities were adjusted by the SFC of 0.86. The substantial increase in the economic rate of return is due mainly to the considerable increase in rice production as a result of higher than anticipated output in hybrid rice seed. C. Economic Analysis 1985 1986 1981 1988 1969 1990 1991 199? 1993 1994 1995 1996 199) 1998 1999 2000 2001 2no 2043 20D 2ncremental Productlon (toneS} Hybrid Corn 0 0 12s59 se245 72171 86624 89000 91316 93175 96128 98504 100880 200880 IDO08 100880 100880 100E80 1OM 880 10068O I0088O Uht 0 0 13SIS 20576 27119 34159 35016 35993 36910 318?1 38144 39661 39661 39661 39661 19661 39661 39661 39661 39661 Hybrid Rice 3 0 287159 429499 608214 142034 ?13809 805583 81')5B 869132 900901 93)681 932681 93)682 93)681 932681 93)60? 93682 93)61 3681 Conventlial Rice 0 123 912 1169 9599 5ISOS 11522 11538 225B IISS 5 2iIS8B 11604 11604 11604 11604 11604. 11604 11604 11604 11604 Cotton 0 0 0 3300 8250 I3158 14661 15583 16501 2141) 28334 19250 19250 19?50 09S50 19) 19)50 19?50 19250 19250 Vegetables 0 0 326J 6535 9682 14850 15345 25840 16335 16830 213)s 21870 21820 2179? 1820 11820 218?0 I1820 li280 21780 SugArbeet o 0 0 114501 124622 )1JS 1'S19f 4801S' 585318 690318 '95439 900500 900500 900S00 90000 900500 900500 900S00 93050O 90SOO Potato 0 84420 96480 204617 2560D? 331254 316045 420836 4656)1 510418 555209 6000D0 600000 600000 6000D0 600000 6OOOOO 600OO0 6000C0 600000 Sugarcane 0 1625 19593 21352 27451 14356 35463 36512 3761B 3818S 39893 42000 41000 41000 41000 41000 41000 41000 41000 4200 Soybean 0 0 1619 1290 231' 2908 3005 3102 3199 3295 3392 3489 3489 3489 3489 3489 3489 31489 3489 1459 Incremental Value (32ll. Tuanl Hytbrid Corn 0 O .00 53.69 43.8) 54.13 64.91 66.15 68.53 70.31 12.10 13.8a 15.66 15.66 75.66 15.66 15.66 15.66 15.66 15.66 15.66 Whea o0 0.00 °4.03 21.36 28.15 35.46 36.41 31.36 38.31 39.26 40.2) 42.2' 41.12 41.1 42.1 41.17 42.1 41.1) 41 11 41A.J 1y6brld Rice 0 0.00 111.18 265.00 424.61 451.83 411.44 491.04 516.65 536.?5 555.86 515.46 575.46 515.46 515.46 S)5.46 515.46 515.46 S1.46 515.46 Conventional Rice 0 6.09 8.18 65.41 800.8 96.81 91.02 9515 91.29 91.43 91.51 91.11 91.12 91.12 91.12 91.12 96.12 91.12 99.12 91 33 Cotton a 0.00 0.00 2.3) 3.30 5.50 5.81 6.23 6.60 6.9' 1.33 1.10 I 10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 Vtgetabito 0 8.00 1.31 2.61 3.81 5.94 6.14 6.34 6.53 6.13 6.93 1.13 .1.3 13 1.23 ' 13 7.13 J.13 1.23 ).I3 Sugarbeet O 0.00 0.00 20.15 21.93 41.54 66.03 84.53 103.02 12I.S 140.00 258.49 1S8.49 158.49 158.49 IS8.49 I25.49 158.49' 258.49 158.49 Potato 0 25.31 28.94 61.39 16.8 99.38 112.81 I26.25 139.69 153.13 166.56 280.00 280.00 180.00 260.00 180.00 180.00 280.00 180.00 2e6.00 l Sugartoat 0 0.58 1.49 2.08 2.09 2.61 2.10 2.78 2.86 2.95 3.03 3.12 3.12 3.12 3.1? 3.12 3.2) 3.22 3.12 3.12 3' Scyoean 0 0.00 2.34 2.30 3.36 4.21 4.35 4.49 4.63 4.17 4.91 S.05 5.05 5.05 5.05 5.05 sos sos s.OS 5.05 TOTAL VAttg (3221. Vuanj 0 31.99 281.17 485.45 699.12 820.31 817.52 930.70 985.90 1041.09 1096.29 1151.48 1151.48 1151.48 2152.48 2252-48 2251.48 1151.48 1151.48 IISI.48 (CONION1C I3VtST2413l COSIS Butidings 5.06 63.19 20.44 3.72 3.112 0.80 - Seed Form OeveloPae_t 2.10 21.60 10.40 4.38 0.26 11.14 - - * - * - - - * * - - Processing and tab. EquIpment 0.56 86.28 4.34 4.49 1.49 15.20 - - * . - lralnlng 0.00 1.16 0.31 0.38 0.00 0.40 - lecinical AsststaIt 0.00 0.33 0.31 0.13 - . - Sub-total 1.) 169.216 35.80 13.10 4.86 31.54 OPE3AMlitG CUOiS 12.66 26.18 28f.59 315.48 429.00 438.79 413.33 489.83 521218 5566.1 572.44 5817.9 586.08 589.60 589.16 592.24 594.11 596.64 598.51 600.11 01 IA (COMIC COIlSTS 19.38 195.34 31S.39 328.58 433.86 416.33 a33.33 4819.83 51.28 556.1 572.44 s87.29 586.08 589.60 589-16 592.24 594.11 596 64 598.52 600.12 I2CR. 11£ tc0ltC ISilCilFlIS .19.38 -163.35 *31.22 156.81 265.26 343.98 402.18 440.81 4641?2 484.38 523.1S 564.19 565.40 561.88 562.3? 559.24 557.317 554.84 552.91 550.11 1fRS 72.011 27 D. Financial Impact Appransal Estimate Actual Finacial rates of returu: Project as a whole 12% 8% For individual seed centcr 8-17'Z n.a. Comments: FRRs were carried out in 1990 constant prices. Data to re-estimate the financial rates of return for individual seed centers were not available. Based on cost/benefit streams compiled by the PMO, FRRs for the processing of selected individual seed categories were estimated as follows: Hybrid rice seed 10% Cotton seed 9 5'c Vegetable seed 3 % Potato seed 13 % Fruit seedlings 7 % E. Financial Analysis (Yuan million) Income Operating | lovestment Net Cost Cost Benefits 1985 - 11.2 8.7 -19.9 1986 32.7 24.7 256.7 - 248.7 1987 292.0 262.7 44.8 - 15.5 1988 331.6 509.7 28.6 -206.7 1989 434.6 397.7 42.8 - 5.9 1990 501.1 407.4 83.4 10.3 1991 494.4 440.7 - 53.7 1992 511.9 456.7 55.2 1993 544.7 486.5 58.2 1994 579.4 519.8 59.6 1995 603.7 533.8 69.9 1996 612.0 548.9 63.1 1997 609.5 548.1 61.4 1998 609.6 551.9 57.7 1999 611.7 551.3 60.4 2000 615.1 554.6 60.5 2001 616.7 556.6 60.1 2002 618.7 559.2 59.5 2003 619.7 559.4 60.3 2004 624.6 561.2 63.4 2005 to 2014 626.0 563.7 62.3 = *10% 28 F. Sttdies Study Purpose as Defined at Appraisal Status China Seed Industry and Market To serve for planning purposes and to provide a Completed basis for designing a second-phase project in June 1989 China's seed industry development programme. Comments: The study concentrates on seed supply and demand, marketing and prices, as well as quality assurance and control procedures. The report suffers from analytical weaknesses but provides a good starting point for future work. 7. Status of Covenants Covenant Subject Date of Compliance Status Cemments Credit 3.03 Section 3.03. Thc Borrower shall carry - Covenant out the training under Part E of thc project complied with in accordance with .. program agreed with the Association. Credit 3.04 (a) Section 3.04 (a): Carry out the studies 12/31/87 Covenant Report submitted to Bank in under Pan G of the project, in accordance complied with July 1988. with the terms of reference and time schedules acceptable to the Association; and Section 3.04 (b): Prepare and furmish to the Association not later than December 31, 1987, a report including the main findings of such studies in light of the objective of the project. Credit 4.01 (b) (ii) Section 4.01 (b) (ii): Furnish to Covenant Association, as soon as available, but in complied with any case not later than six months after the end of each such year, a certified copy of the report of such audit by the said auditors, of such scope and in such detail as the Association shall have reasonably requested. S. Use of Bank Resources A Stldl S (stal cksi Stowe of FojeaF FY3 F8YM 05 N F FY FY9 F cYst Total Cpde llvoughappealsaJ 06 25.7 3.5 29 a Appralsal Utough - 5.3 53.8 - -591 board approval Boed approval Uwough eflectlveness Stipervislan * * 9.5 14.7 21 4 6 3 9 7 2.1 267 92 4 TotW 0.6 31.0 66.8 14.7 21.4 a.3 97 2.1 267 1113 B. MIssion PlssionType K4 IYw 11 Nto. alfPCrso 5 Days In Fkld Speda-a- Itpexed 21 Petmance Petkg 31 Types otPRoblems Pre-appraisal 5S84 5 21 A.Ll.ST.E Appraisal Misslon 8)54 3 23 Ag ST.E Superlslan 1 10)58 2 6 A.E 1 2 64B7 3 16 A.E.ST 3 am58 2 14 A.ST 4 6J89 1 13 ST 1 5 8)90 1 16 ST 11 Date ot return to hladquadtess. 2V A - AgrlcLitwuasl; E - Economist: I - instuuoisb Speclist; L - Laon Olfcer; ST * Seed Tectmoxoglst. 31 1- Problem-kee or mbino problems. 2 * Modesate problems. 3 - Maor ptoblems. 4/ MIssion was accomparded by a DAMDA represeMaeive to review technical assistnce. IBRD 232L8( U. S. S. R. U. '.S. R. Harbin MON()N I ( )IIn 'i iun lrunmqi - r Shensang JAPAN _iV. |C "1* * YinchLi ShijiazKD.PR. m sohhot O AFGHAMIIA ~~~~~~~~~~~~~~~~~~~~~~~ E/IGKREA, - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Tipnjin / ~~~~~~~~Shijiazhuang ,.REP. OF 0 ~~~~~~~~~~~~~KOREA This map has been prepored by Tavun The World Bank's stafH exclvsively Taivuan for the convenience of readers and is exclusively for the X i nJinan Internal use of The World Bank . Inng Group The denominations used 4 and the boundaries shown part of 1' ~~~~~~~~e arId Ban ~~~~~~~Oroup ~~~LanzhoujF* on this ma do not imp 1 on the . , La z o \ is paort of The World Bonk Group,-f,* any jud ement or. the legatl Zhengzhou status o any territory or any endorsement or acceptance of i,. such boundaries \ x * \ " Xi'an 5 O'Na(Ijing I ¢5hanghai Heft/ '- .k'GHAl N l\;i p iChengdu Hguhangu LhesaWun NEPAL . tu J i s eNanchong CHINA > 5x -- N I . 4^3 1 ~~~~~~~~~~ ~ ~~ ~ ~ ~~~~~Changsh.< - ' -; CHINA ' SEEDS PROJECT u z 1' ^'thou Location Of Project Institutions |ACvan, SEED CENTER PRODUCTION A'ID PROCESSING LOCATIONS - .-- GRAND CANAL o SELECTED TOWNS Guangzhou OS PROVINCE CAPITALS iS _ @ NATION4AL CAPITAL z OGKONG, U.K. PROVINCE BOUNDARIES > t ()1,,ll :11 ' 123Macao, Port. INTERNATIONAL BOUNDARIES LAOPE S Hikou PHILIPPINES < 11115 0 ,1 * 3 | , . THAILAND<) \ i,,l).,. jn < 1.0 \'' 0' : ! S Em SFPTEMBER 1991