AGROCORP International has a US$50 million loan facility from Rabobank and Dutch development bank FMO to help ensure a continuous supply of food from farmers to consumers in developing economies.
Unique in that it has been written with sustainability as well as financial covenants, the five-year facility is expected to bolster food security in South and South-east Asia.
Agrocorp is a trading company based in Singapore, and added Australian assets to its global portfolio in 2017 with its purchase of Associated Grain at Dalby in southern Queensland.
The loan represents Agrocorp’s first borrowing base facility, and is split into two equal tranches, with FMO covering prepayments and inventory, and Rabobank financing receivables.
“The facility comes with sustainability covenants that are considered in the same light as financial covenants,” Agrocorp head of business development Vishal Vijay said.
“This has enabled us to avail more attractive pricing and flexible terms than our normal facilities, hence allowing us to service food exports out of and imports into developing markets to a larger scale.
“For Australia in particular, this will allow us to have larger mungbean, chickpea and lentil export programs into South Asian markets such as India, Bangladesh, Pakistan and Sri Lanka.”
As part of the facility, Agrocorp will be working with a consultancy firm Earth Systems to set and monitor sustainability targets and reporting requirements.
Agrocorp will also be working with FMO to establish farmer-training programs in countries including Myanmar.
“This new working-capital facility will enable the client to implement a more sustainable food supply chain in emerging countries,” Rabobank Singapore chief executive officer Harjan Kuiper said.
Mr Iyengar said Agrocorp was well placed to meet sustainability covenants to satisfy loan requirements, and because sustainability was already an important focus area for the company.
‘We are happy to have finalised this facility with FMO and Rabobank and are confident that this will be an important stepping stone to further growth and cooperation,” Agrocorp chairman and managing director Vijay Iyengar said.
“Agrocorp is a natural partner for FMO due to its strong and growing presence in fast-developing economies like India, Myanmar, Turkey and Bangladesh,” FMO chief investment officer Linda Broekhuizen said.
“Sustainability is also a priority for the company given its market leadership positions in pulses and plant proteins, the consumption of both of which is seen as an important gateway towards a more environmentally friendly food system.”
Agrocorp said it had increased its efforts to execute business via blockchain solutions that digitised trade documents.
These have ensured intercontinental agricultural trade could take place despite flights and courier services being disrupted by the COVID-19 pandemic which has challenged food supply chains in developing markets especially.
Agrocorp’s global supply chain handles commodities including pulses, wheat, rice, oilseeds, sugar and nuts.
Last year, Agrocorp moved more than 12 million tonnes of commodities from origins including Australia, North America, Ukraine, Myanmar and West Africa.
FMO supports sustainable private-sector growth in developing countries and emerging markets by investing in projects and entrepreneurs.
FMO focuses on three sectors which it sees as having high development impact: financial institutions; energy; and agribusiness, food and water.
Its committed portfolio of €10.4 billion spanning more than 80 countries, and is one of the larger global bilateral private-sector developments banks.
Source: Agrocorp International, FMO, Rabobank