World Bank to Support Rural Poverty Reduction in China’s Guizhou Province

September 30, 2014

WASHINGTON, September 30, 2014 – Today, the World Bank Board of Executive Directors approved a loan of $100 million to the People’s Republic of China to support rural development and poverty reduction in Guizhou in the southwest part of the country

“The Guizhou Rural Development Project will support the poverty reduction strategy of the Guizhou Provincial Leading Group for Poverty Reduction and Development, which promotes investments in commercial agriculture in priority destitute mountain areas.  The project will support the development of agriculture through farmer cooperative institutional development, pro-poor value chains and marketing interventions, private enterprise participation and investments, and modern agricultural extension services delivery,” said Ulrich Schmitt, the World Bank’s task team leader for this project

“Building on our experience in working with the Guizhou Provincial Leading Group for Poverty Reduction and Development on innovative poverty reduction programs over more than two decades, we expect this project to serve as a new demonstration for agricultural sector modernization. The project will support organizational arrangements in rural areas, better public services, and more outreach to poor and ethnic minority people in China’s disadvantaged rural areas,” he added

Guizhou is one of China’s poorest provinces.  Out of a total population of 40 million people, 11.5 million live below China’s official rural poverty line of RMB2,300 yuan a year (about US$375 a year).  About 40 percent of the province’s population belongs to various ethnic minorities, which are overrepresented among the poor

Poverty is primarily a rural phenomenon and agriculture remains a key entry point for poverty reduction, employment creation and rural development. However, agricultural production is currently characterized by often scattered and uncoordinated production of many small-scale household farms. These households, in general, have limited access to capital for investments, lack adequate institutional arrangements to achieve the horizontal integration of production, do not have timely market and price information, and lack access to better production technology and management skills, which often results in sub-standard product quality and prevents producers to exploit opportunities for value addition and benefit from growing urban markets. Furthermore, these structural weaknesses, in particular the lack of a critical mass of production, do not provide incentives for private businesses to invest in up-stream processing and marketing.

The new project will provide support to professional farmer cooperatives, including the provision of office infrastructure and establishment cost for farmer cooperatives, the creation of a decentralized Farmer Cooperative Development Fund to finance cooperative level investments in improved production, value addition, and marketing, and the provision of financing to cooperating agro-enterprises for investments in processing, post-harvest handling, storage, quality control, packaging of agricultural products, market exploration and development, food safety monitoring, certification and brand naming, and risk prevention and mitigation through a pilot agricultural crop insurance scheme.  The project will also fund the construction of agricultural production roads, irrigation and drainage works, communication and information infrastructure, and public market facilities to complement the Farmer Cooperative Development Fund, and public services in support of farmer cooperatives. Farmers and agricultural technicians will receive technical assistance and training, and policy studies will be carried out on topics ranging from poverty reduction, agriculture development and rural sectors in poor areas, to how to improve the investment environment, governance and fair benefit sharing for cooperatives and enterprises

The project will be implemented in 11 counties, prioritized for poverty reduction, benefiting some 444,000 people of whom 172,000 are registered as poor and 281,000 belong to ethnic minorities. The project is part of a series of World Bank-financed projects to scale-up innovative features in China’s poverty reduction program.  The first three projects, implemented during 1995-2006, demonstrated multi-sector approaches to rural poverty reduction in various areas of extreme rural poverty.  The two subsequent projects, implemented during 2005-2012, promoted more participatory and community-driven approaches to rural development in marginal areas

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