Singapore-based agribusiness Agrocorp has received a $50 million borrowing base facility from Dutch financial institutions FMO and Rabobank. The loan is intended to “ensure a continuous flow of food from farmers to end-consumers” amid the Covid-19 pandemic, which “has challenged food supply chains globally and especially in developing markets in Asia, the Middle East, and Africa,” an Agrocorp statement said.
Agrocorp said the loan is its first-ever borrowing base facility, and will be split into two $25 million tranches.
The facility is conditional on Agrocorp meeting a number of sustainability requirements. While the company is yet to provide full details on what these requirements are, it said it will collaborate with FMO to establish farmer training programs in Myanmar and its other markets.
Agrocorp also said it is working with Earth Systems, an Australian environmental and social consulting firm, to set and monitor its sustainability targets and reporting requirements under the loan agreement.
Technology is likely to feature in these targets. Increasingly, tech is seen as having a critical role to play in improving outcomes for the smallholders who make up the majority of Asia’s agricultural producers. Last month another Singapore-based agribusiness, Olam, secured a $176 million loan to boost smallholder production and encourage greater digital adoption among farmers in the region.
Agrocorp also said it has “increased its efforts to execute business via blockchain solutions that digitizes trade documents, hence ensuring intercontinental agricultural trade could take place with flights and courier services upended” during the supply chain and travel disruption caused by Covid-19.
This follows a trial run back in April in which Agrocorp and Cargill completed a wheat trade between North America and Southeast Asia using blockchain technology, with the $12 million deal settled in just a few hours rather than the typical weeks-long process.
Agrocorp has operations in 20 countries and specializes in supplying a variety of agricultural commodities, including pulses, rice, wheat, nuts, oilseeds, and sugar. It claims to have shifted over 12 million tons of these in total last year, with “population rich consumption centers” such as Bangladesh, China, India, Indonesia, and Vietnam its main export destinations.
Vijay Iyengar, chairman and managing director at Agrocorp, said the company is “excited about the sustainability covenants and [is] 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 [Agrocorp].”
FMO’s chief investment officer Linda Broekhuizen said that Agrocorp is “a natural partner for FMO” due to its presence in several of the world’s fastest-developing economies.
“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,” she added.