Singapore, June 2, 2020 – The COVID-19 pandemic has challenged food supply chains globally and especially in developing markets in Asia, the Middle East and Africa where lockdown measures have led to reduced food production and rising prices. In order to ensure a continuous flow of food from farmers to end-consumers, the role of the commodity merchants has become more important than ever. One such merchant is Agrocorp International, and in order to increase their ability to service these markets, FMO, the Dutch entrepreneurial development bank, and Rabobank have signed a USD 50 million committed sustainable borrowing base facility.
Agrocorp is a global supply chain company specialized in various agricultural commodities such as pulses, wheat, rice, oilseeds, sugar, and edible nuts that is headquartered in Singapore. The company has operations in over 20 countries. In 2019 the company moved more than 12 million tons of goods between cultivation centres such as Australia, Canada, USA, Ukraine, Myanmar and West Africa, primarily into population rich consumption centres in Asia and the Middle East such as Bangladesh, India, China, Turkey, Indonesia and Vietnam.
During these unprecedented volatile times, Agrocorp plays a crucial part in the food supply chain, by ensuring food security especially in South and South-East Asia. Over the past month, the company has increased its efforts to execute business via blockchain solutions that digitised trade documents, hence ensuring intercontinental agricultural trade could take place with flights and courier services upended.
The new loan by FMO and Rabobank is Agrocorp’s first borrowing base facility. The facility is split into 2 equal tranches with FMO covering prepayments and inventory and Rabobank financing receivables. Rabobank will also take on the role of the facility agent. 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 markets such as Myanmar where it has a strong presence.
Vijay Iyengar Agrocorp’s Chairman and Managing Director, commented:
‘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. It is especially commendable that this facility was closed during these turbulent times and we are grateful for the trust that both Rabobank and FMO have placed in us. We are also excited about the sustainability covenants and are well placed to meet them, not just for the lending part of the facility, but more so because sustainability is an important focus area for the company.“
Linda Broekhuizen, Chief Investment Officer at FMO 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. 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.”
Harjan Kuiper, CEO of Rabobank Singapore, said:
“We are delighted to have the opportunity to work with Agrocorp and FMO, both highly reputable firms. This new working capital facility will enable the client to implement a more sustainable food supply chain in emerging countries. Even more so in times like these, where food supply chains are challenged, access to capital is critical. As the premier global Food & Agri bank, this facility fits perfectly with our cooperative mission of ‘growing a better world together.’ Our knowledge, network and financial product offerings enables us to further encourage our clients to implement a more sustainable food supply chain.”