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producers. When negotiations with a
*5 potential partner broke down, Rabobank
International (Rl) gave approval to start a
stand-alone rural financing business.
Tojump-startthe programme, Dick
Witherowtransferred from Primary
Industries Bank of Australia (acquired by
Rl in 1994) where a successful rural
financing programme had been running
for some time. 'It took us about five
months to do all the background work,'
he says, 'but we disbursed our first loan in
January 2002.'
Rabobank Chile started by offering a six-
year interest-only loan designed to allow
farmers to take a long-term view of new
investment projects. Because growers do
not immediately have to start making
amortization payments, they can
consider land acquisition or expansion
investments.This type of financing was
unheard of in Chile,' explains Witherow.
The country had a well-developed
financial system, but at the time no
institution was concentrating on the rural
market. 'In those days, Chilean banks
tended to focus on amortizing loans,' says
Gieskes. 'What we brought to the table
wastruly innovative.'
Term loans like this are more suited to
vine or tree crops that involve larger
investments. Since the fresh fruit industry
dominates the limited supply of arable
land in Chile, it is not surprising that
producers in this industry tend to
dominate Rabobank Chile's portfolio.
Nevertheless, the company is selective
about who it works with. 'We defined our
target market as the top 5% in any
industry,' says Witherow. These tend to
be growers who are at the forefront of
farming and plan to stay there. 'Just like
when you get married,' laughs Gieskes,
'you want to select a candidate who's
going to last for the long-term.'
Rural lending is now contributing
strongly to the profitability of Rabobank
Chile. With some 70 rural clients and a
portfolio of approximately US$ 140
million, the company is looking to
expand its business by introducing
seasonal finance and setting up Global
Financial Markets to help clients hedge
the interest and currency risks they run.
These initiatives are not just the result of
the business opportunities available:
Chilean banks are now starting to offer
similar term loans to farmers. 'Chile is
great at learning from the success of
others,' adds Gieskes.
Chile was such a success that, in 2004,
Dick Witherow left the programme in the
capable hands of Raül Venezian, in order
to help the Sao Paulo office start a farm
financing pilot project in Brazil. 'Chile
gave us a basic model that outlined what
tasks had to be done to get the business
up and running,' explains Witherow. The
