World Bank approves $150m loan for China's farm produce distribution system

BEIJING - The World Bank has approved a $150-million loan to southeastern Chinese province of Jiangxi to improve its farm produce distribution system, the bank said in a statement.

The loan will benefit over 200,000 farmers through more efficient farm-to-market supply chains, according to the statement.

"Despite the rapid development of produce markets in China, farm produce logistics remains a bottleneck in the distribution system and has hindered producers' potential for more efficient production and higher incomes," said the statement.

The World Bank noted that in Jiangxi, the agricultural sector represents 13.8 percent of GDP yet involves 54.3 percent of the population. Inadequate market infrastructure, storage and transport services, and information systems have contributed to low farm-gate prices, and little incentive for farmers to improve product quality.

"Geographically, Jiangxi is close to the major urban markets of Shanghai, Guangzhou and Hong Kong, 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." Wang said.

The 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 purchasing 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 be implemented in eight counties of Jiangxi province from 2018 to 2023. The total cost of $198.28 million will be financed by the World Bank loan and a counterpart fund of $48.28 million from Jiangxi provincial government and the participating counties.

Technical assistance and training will be provided under the project.