New World Bank Project Supports Farmer Cooperatives to Reduce Poverty

February 9, 2017

WASHIGNTON DC, February 9, 2017 – The World Bank’s Board of Executive Directors today approved a $100 million loan, which aims to increase the incomes of poor, rural communities in China’s Shaanxi Province by investing in farmer cooperatives and partnerships with agribusinesses to boost smallholder farmers’ participation in modern markets.

About 4.6 million people in the province live under the national rural poverty line of RMB 2,300 (about $336) per year. Most of the poor live in mountainous areas and depend on agriculture to make a living. Low productivity makes it hard to attract investments in upstream processing and marketing, which in turn makes it difficult for farmers to participate in modern supply chains.

“Farmer cooperatives can play an important role in helping farmers operate in modern value chains, by providing technical training and information, collectively purchasing production inputs such as seeds and fertilizer and marketing products for members. But many cooperatives lack the management capacity, are under-funded, and have difficulty getting access to credit. This project will address these issues and strengthen the capacity of farmer cooperatives to help improve small farmers’ access to markets and take advantage of economies of scale to increase their incomes,” said Yan Guangming, World Bank’s Senior Urban Specialist and Co-Task Leader for the project.

The Shaanxi Poor Rural Areas Community Development Project will provide conditional grants to new or existing cooperatives for their investments, such as improved seeds and breeding stock, processing, storage and marketing facilities, and goods and services related to upgrading quality standards. It will also provide matching grants to finance enterprise investments that establish partnerships with cooperatives with demonstrated marketing linkages and benefit-sharing mechanisms. In addition, the project will improve rural roads, rehabilitate irrigation and drainage systems, establish communication and information infrastructure, and provide cold storage and market facilities, as well as training and extension services.

“This new project is a continuation of the World Bank’s cooperation with the Chinese government in poverty reduction, which has evolved from multi-sector approaches and participation and community-driven development toward market-based approaches to poverty reduction. It adopts the pro-poor value chain approach to capture opportunities for poverty reduction arising from China’s growing urban market,” said Cao Wendao, a World Bank Senior Agriculture Economist and Co-Task Leader for the project.

The project, which will be implemented between 2017 and 2022, will cover 253 administrative villages in 11 poor counties in Shaanxi, with a total population of 177,578, of whom 48,665 are poor. The $100 million IBRD loan is matched with government financing of US$50.04 million.  


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