WASHINGTON, December 15, 2017 – The World Bank’s Board of Executive Directors approved a US$150 million loan today to improve farm produce distribution systems in China’s southeastern province of Jiangxi, which will benefit over 200,000 farmers through more efficient farm-to-market supply chains.
Despite the rapid development of produce markets in China, farm produce logistics remain a bottleneck in the farm produce distribution system and has hindered producers’ potential for more efficient production and higher incomes. The Chinese government has made development of modern, more effective agricultural produce distribution systems a priority.
In Jiangxi, the agricultural sector represents 13.8 percent of its GDP yet involves 54.3 percent of its population. Inadequate market infrastructure, storage and transport services, and information systems have contributed to low farm-gate prices, and little incentives for farmers to improve product quality.
“Geographically, Jiangxi is located close to the major urban markets of Shanghai, Guangzhou and Hong Kong SAR, China, with well-developed transportation routes by road, air, and the Yangtze River. There is potential for growth through accessing these high value urban markets, if bottlenecks in the distribution system can be minimized,” said Xiaolan Wang, World Bank’s Senior Operations Officer and Project Team Leader. “Through the new project, we will work with Jiangxi to address the key bottlenecks in each of the selected value chains and modernize the farm produce distribution systems, which will eventually increase the incomes of farmers.”
The Jiangxi Farm Produce Distribution System Development Project will increase the efficiency and productivity of production logistics and farm systems, including the integration of systems to collect, sort, package and store agricultural products. It will support farmer cooperatives in their purchase of business equipment, access to markets, product certification, and e-commerce development. For the first time, the project will use a partial risk guarantee mechanism to improve farmers’ access to credit from local commercial banks. The project will also improve the physical structures, services and management systems of the farm produce markets and distribution centers, to increase their efficiency, provide value added benefits and reduce waste of farm produce. Technical assistance and training will be provided under the project.
The project will be implemented in eight counties of Jiangxi province between 2018 and 2023. Its total cost of US$198.28 million will be financed by the IBRD loan and a counterpart fund of US$48.28 million from Jiangxi provincial government and the participating counties.
Local farmers will benefit from improved post-harvest handling, market information, certification, and greater volume of products sold. Traders, wholesalers, buyers, processors, e-commerce operators, and retailers will benefit from more efficient produce distribution and transparent price formation. Staff and management of the markets and distribution centers will benefit from training and capacity building. Consumers also benefit through access to greener, safer and higher quality foods.