WB Project Helps Poor Farmers in Western China

The World Bank Board of Executive Directors approved a new $150 -million project to support poverty reduction in three of China’s western provinces.

Called the Poverty Alleviation and Agriculture-based Industry Pilot and Demonstration in Poor Areas Project, it helps poor farmers in Gansu, Sichuan and Guizhou provinces by supporting farmer cooperatives and investing in agriculture infrastructure and services to stimulate employment and help generate income.

It is the sixth in a series of Bank-financed projects that began in the 1990s to support the State Council’s Leading Group of Poverty Alleviation and Development to introduce innovations into China’s national poverty reduction program.

Over the past three decades, economic growth, reform and urbanization in China have helped some 500 million people escape poverty and allowed some 260 million rural migrants to move out of agriculture and into industry and service. However, 83 million people remained in poverty in 2013, mostly in rural areas, as measured by China’s national poverty line of RMB 2,300 (about $375) per year.

“The new project is designed to promote farmer organizations for agriculture production in rural areas and a business- and market-oriented approach to poverty reduction, a concept called ‘rural industrialization’ in China,” said Ulrich Schmitt, the World Bank’s task team leader for the project. “Key elements of the project are agriculture development through well-organized and economically independent cooperatives, as well as partnerships of cooperatives with agro-businesses that can provide market linkages.”

Covering 537 villages in 27 counties located in poor mountain areas of Gansu, Sichuan and Guizhou, the project promotes integrating scattered household-level agricultural production to improve the organizational efficiency of farmers and help them achieve economies of scale in production. It supports technological change to increase agricultural productivity, output and product quality to generate rural income growth.

In particular, the project will support up to 400 farmer cooperatives by providing technical advisory services, crop insurance, grants to finance investments in agricultural products and services for value chain development, management and business training, and office facilities.

These various elements of value-chain development and integration are expected to increase the ability of farmers to benefit from economic opportunities arising from China’s growing urban markets and domestic consumption of agricultural products.

The project also allows cooperatives to partner with qualified agricultural enterprises, and will finance the construction of production roads, irrigation and drainage systems, market facilities and other public infrastructure, as well as public services including food safety testing, control and certification, extension and training, agricultural research, and technology transfer activities.

At the national level, it will support analytical studies, training, workshops and development of policy guidelines to strengthen implementation of China’s national poverty reduction strategy. Project areas have a beneficiary population of 946,000 people – 343,000 registered as poor and 241,000 as ethnic minorities.