Wh at RD and RF are doing in a sense is helping to create a sustainable Food and Agribusiness sector for the future Hans Bogaard: WORKING TOGETHER Adding value OPENING UP THE ENTIRE VALUE CHAIN Rabo Development, which incorporates Rabo International Advisory Services (RIAS), was set up a few years ago to reach out to rural areas and improve ready access to financing for farmers. That sounds quite simple, says RD's Head of Agribusiness Hans Bogaard, but the ultimate aim is improve the quality and quantity of their products. Not only does this benefit the farmers themselves, it can add enormous value for RI's clients who take up these products. "Also," he says, Rabobank Agri Fund, a Guarantee Fund set up by Rl and RF and man- aged by Rl Trade Commodities Finance, is another instrument within Rabobank which can strengthen the relationships with Rl clients by im- proving the access to pre-finance to their suppliers at sustainable terms. Especially in these times of fïnancial crisis, where local banks in emerging markets are more restrictive to rural lending and traders are less willing to pre-finance their suppliers, the Agri Fund can provide added value. The principal objective of the Agri Fund is to change the approach of the local banks towards rural lending and exporting companies cooperatives buying from small producers through offering them adequate fïnancial risk-mitigating instruments. The Rabo Agri Fund, says Ellen Bogers, Fund Manager, issues partial credit-guarantees in favour of local banks, allowing them to offer com mercial finance for the purchasing, processing and trading the commodi ties in the international market at better pricing and less higher collateral restrictions. Fundamental in this process is that we decrease, on a step- by-step basis, our risk while the local bank will increase its risk and so enabling the local bank to build up a credit history with their clients. The Agri Fund focuses on creditworthy companies and cooperatives, buying from small buyers, which are too big for RF and too small for Rl. By helping to eliminate that one stumbling block - local financing for the companies and linking local farmers to the big commodities traders - the Agri Fund helps to open up the entire value chain and to facilitate sus tainable and commercial business in these emerging markets. Ultimately, our challenge is that in our 3 to 4 years relationship with a local bank and the cliënt, the banks' attitude towards lending to companies in the Agri sector will change, as they learn to see it as good commercial business. "big commodities traders like Cargiil, ECOM and Dunavant often have to pre-finance their forward purchase of raw materials, such as cotton, cocoa or coffee. But they don't see this as their core business and are more than happy to move this pre-finance exposure to our local banks. Besides, these banks are in a much better position to monitor and control these projects and limit the risk of defaults." A good example of how Rl, RD and RF are working together to add value for an Rl dient is the Maragra project in Mozambique for sugar giant lllovo, part of British Sugar. RF has been closely involved in thefunding of the rehabilitation of a former sugar plantation and establishment of farmers associations, which involved the installation of new irrigation and drainage systems. RD's RIAS also offered advice on the structuring of an effective cooperative and streamlining the supply of raw materials to lllovo. While RF provided the initial grants for the project and mitigated startup risks for financing the farmers, the financing for the growers will eventually be taken over by RD's local partner bank Banco Terra. In effect, RF is bridging the gap between the pioneering stage and the stable stage, when the farmers or cooperatives move on to be banking clients. This model is working so well that some clients, like lllovo and ECOM, are working with RF and RD partner banks in several countries, sometimes covering the entire value chain, from producer to retailer (see box). "Projects like this are a perfect example of just how much value we can add for RI's clients if we work together proactively," Albert Boogaard says. "We can improve the quality and quantity of the raw materials our clients need, while also improving the working conditions and income of the farmers that produce those commodities. Not to mention the fact that we are helping clients to increase the sustainability of their business." issue 20 jul THE WORD

Rabobank Bronnenarchief

blad 'RI The Word / The Word' (EN) | 2009 | | pagina 32