REGIONAL AGRICULTURAL COMMODITY PROGRAM

Location:

Regional

Project number:

35253

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

FI

Approval date:

22 Jun 2004

Status:

Complete

PSD disclosed:

21 May 2004

Project Description

The proposed project aims to promote and develop a secure approach to agricultural commodity financing in Russia, Ukraine and Kazakhstan (the “Region”). The financing is structured as ownership-based commodity repo financing, under which Rabo purchases agricultural commodities from agribusiness companies in the Region (typically processing companies) and at the same time sells the commodities forward at a price, which includes financing costs and margin. Rabo Invest and the EBRD would share the risks of the ultimate clients.

Transition Impact

The transition impact of the project is considered to be strong. Agricultural Commodity Financing Program with Rabo Invest, originally started in Russia, now has outgrown the boundaries of this one country and is to become a truly Regional Program. The participation of the Bank in the new financing has several benefits for this project and for the agribusiness sector in the Region in general:
(i) it enables the continued provision of working capital financing to local agribusiness companies, who otherwise could not receive financing in the absence of the properly functioning warehouse receipts (“WHR”) system in Russia and Ukraine;
(ii) it continues to prepare the ground for the WHR system in Russia and Ukraine while the institutional framework is being established, by setting up procedures for licensing of warehouses and asset-backed lending to local companies;
(iii) by adding credibility to Rabo Invest’s operations, it provides a demonstration effect for other lenders in the agricultural commodities market of the Region, which may lead to increase in financing provided by the local banks.

The Client

The EBRD's nominal client will be Rabo Invest (a 100 per cent-owned subsidiary of Rabobank International) or its subsidiaries. However, the main beneficiaries of the financing will be agribusiness SMEs in the Region, typically processing and/or trading companies.

EBRD Finance

Limited recourse loan, funded or unfunded to Rabo Invest to finance agribusiness companies in the Region. The EBRD’s maximum exposure in this project will be US$200 million. Rabo Invest and the EBRD share the risks of the ultimate clients in each of the sub-projects. The EBRD participation will have a maturity of up to 12 months.  However, the EBRD loan can be rolled over on an annual basis for the next 3 years.

Project Cost

The total project amount is estimated at ca. US$780 million, subject to adjustment depending on the market needs in the relevant agricultural season.

Environmental Impact

The key environment, health and safety risks associated with this project are:
a) that the commodities purchased and stored by Rabo Invest may not be of sufficient quality or deteriorate during storage, therefore making them unsaleable
b) that the borrowers may not purchase the commodities.  The latter could occur, because the borrowers are impacted by problems of an environmental nature, which restrict their ability to operate.  
Therefore, Rabo Invest must ensure that warehouses utilised to store commodities meet the necessary standards to maintain quality, and that borrowers are required to comply with national standards for environment, health and safety.  Rabo Invest will provide the Bank with annual confirmation that these requirements have been met.

Technical Cooperation

None.

Company Contact

Maarten Pronk, Chairman of the Executive Board
Tel: +7 095 721 1984
Fax: +7 095 721 1985
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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