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EBRD extends support for BiH’s agricultural sector
€6 million loan is the first EBRD financing in the country collateralised by agricultural commodities
The EBRD is providing a €6 million working capital loan to Bimal, Bosnia-Herzegovina’s (BiH) sole edible oil producing company, as the Bank’s first financing to a local company in the country exclusively collateralised by agricultural commodities.
The project is part of the EBRD’s drive to increase investments in the agricultural sector and help boost production against a backdrop of spiralling world food prices.
Bimal is the only edible oil processor in BiH that has crushing, refining and bottling capacities. The EBRD’s funding will be used to finance the procurement of raw material, such as seasonal sunflower, rape, soybean seeds and crude oil, which will be stored in silos and tanks and then used for further processing into oil and other related products made out of the raw materials.
This loan has a key regional element as it will allow Bimal to support the agricultural sector in neighbouring countries as well. With the help of the €6 million loan the company plans to procure additional seeds from farmers in BiH, Serbia, Croatia and Hungary, exploiting its favourable location in Brcko on the border between BiH and Croatia, close to the sunflower-rich regions of Serbia and Hungary, as well as to target sales markets in the neighbouring countries.
The promotion of agricultural commodities as collateral for loans creates a base for the EBRD to initiate a dialogue with the BiH authorities, agribusiness entities and banks about warehouse-receipt (WHR) financing. Warehouse receipts provide farmers and traders with access to finance, providing a reliable means of producing, storing and exporting grain at competitive prices. The EBRD has been actively supporting warehouse receipts as a means of finance across its countries of operations.
EBRD President Thomas Mirow, visiting Bosnia-Herzegovina on his first official trip abroad as EBRD president, said that EBRD’s support for Bimal as one of the leading agribusiness company in BiH is aimed at strengthening the company’s relationship with local farmers and developing new ways to use agricultural commodities as security in order to raise financing in this sector. "This type of lending will not only help the financing of a complex sector but ultimately help the economy through the development of the agribusiness sector," Mr Mirow said.
Bimas was built in 1956 as the only factory for production of vegetable oil and fat in BiH. Its operations ceased during the 1990s conflict, but reopened again in 2003 following privatization by the Austrian joint venture company Seed Oil Holding from Vienna.
The EBRD is providing the equity finance under the recently established EBRD-Italy Western Balkans Local Enterprise Facility (WB-LEF*) which provides individual investments in the range of €1-8 million.
The EBRD has invested more than €762 million in BiH in a total of 69 projects across all sectors of the economy. In the agribusiness sector, the EBRD has directly committed more than €4.6 billion in over 320 projects across central and Eastern Europe and the Commonwealth of Independent States.
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