In the years leading to project preparation in 2005, the People’s Republic of China (PRC) experienced a sharp rise in demand for agricultural products, especially higher-value horticultural and livestock products. Coinciding with increases in world commodity and agricultural prices, this provided an opportunity for farmers and agro-enterprises to expand production and sales for the domestic market and for export. To do this, however, they needed to increase production—a challenge for farmers in dryland areas—and improve marketing-related infrastructure.
The Dryland Sustainable Agriculture Project was approved by the Asian Development Bank (ADB) in November 2008 for a loan of $83 million to address constraints in producing, processing, and providing support services and investment finance to tackle natural resource degradation and promote the long-term sustainability and profitability of higher-value agricultural production and processing. Its envisaged impact was reduced rural poverty in Gansu, Henan, and Shandong provinces through the sustainable use of land and water resources. Its expected outcome was increased agricultural productivity through the adoption of sustainable farming practices in the project area. The principal planned output was promotion of financially and environmentally sustainable agriculture in dryland areas through partnerships between private agro-enterprises and smallholder farmers.
At project completion in 2016, 27 partnerships across 26 counties were established, involving 49 agro-enterprises. All but 1 of the 44 agro-enterprises, which participated in a survey about profitability during the project completion review, earned profit each year, from 2013 to 2017. A machinery-manufacturing agro-enterprise in Henan Province had been experiencing declining demand and net profit since 2015, and it returned a loss in 2017. With respect to financial soundness, majority of the agro-enterprises met all covenanted financial ratio criteria throughout 2013−2017.
An estimated 672,850 farmers were engaged in agro-enterprise partnerships. During the midterm review (MTR), the original target of 600,000 households was deemed overly ambitious and thus revised to 600,000 farmers. The actual number of farmers engaged exceeded this revised target by 12%. Targets with respect to support services were also mostly met.
Successful delivery of the key output targets enabled the project to achieve its intended outcome. Against a 32,000-target, more than 68,000 people were either directly employed in project-supported agro-enterprises or indirectly employed in other service industries financed by the project. From 2009 to 2015, the average household income from farming rose by Chinese yuan (CNY)12,095 or about $1,889, substantially exceeding the target increase of CNY1,000 or around $157.
Project-supported agro-enterprises increased their output of value-added products to 629,000 tons in 2016, substantially overachieving the 500,00 ton-target. In the face of a much-lower-than-anticipated production base, farm productivity increases due to diversification to higher-value crops and the expansion of support services, processing facilities, and access to investment finance were to take the driver’s seat in raising farm outputs and incomes.
The Ministry of Agriculture was the executing agency. The ministry’s Foreign Economic Cooperation Center was the central project management office; while the provincial governments served as provincial executing agencies and the county, district, and municipal governments as implementing agencies.
