New perspectives

Agri Revolution
Cartagena 18 Oct 2013

MICHAËL DE GROOT
Global Challenges

2
Financing the Agricultural Value Chain
The experience of an international bank in building and
integrating a more efficien...
Credit needs of Value Chains

4
I Rabo Rural Fund (guarantees)
In many (developing) countries the agricultural sector
lacks sufficient and affordable fina...
I Guarantee structure
RABOBANK
(i.c.w. Dutch Ministry of Foreign Affairs/DGIS & NGOs)

Fund-management
+ Participation

Fu...
II Warehouse Receipt Program
Warehouse Receipt Program, to allow agricultural
producers and processors to obtain working c...
II Warehouse Receipt Program
The implementation has been very successful, with
substantial increase in finance activity.
I...
III Integrated Agriculture Finance Structure
“from crop to cup”
Objectives:
 Risk mitigation for farmer financing
 Secur...
III Integrated Agriculture Finance Structure
Mechanism:
 Down-payment by the farmer
 Repurchase agreement from equipment...
IV Ownership Based Financing of
Agricultural Commodities
Objectives:
 Mitigate legal and regulatory issues
 Improve the ...
Thank you, Michaël de Groot
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“Fondo de Garantía de Agricultura Sustentable” – Michaël de Groot, Rabobank

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Taller Regional “El rol de las garantías en la estructuración del financiamiento ambiental y climático" | Cartagena de Indias, Colombia, 17-18 de octubre de 2013 | IV sesión: Uso de garantías en proyectos de agricultura y uso de la tierra.

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“Fondo de Garantía de Agricultura Sustentable” – Michaël de Groot, Rabobank

  1. 1. New perspectives Agri Revolution Cartagena 18 Oct 2013 MICHAËL DE GROOT
  2. 2. Global Challenges 2
  3. 3. Financing the Agricultural Value Chain The experience of an international bank in building and integrating a more efficient agricultural supply chain environment.  Rabobank’s position in the agricultural value chain  Four examples: i. 3 Rural Fund / Guarantees ii. Warehouse Receipt Finance iii. Integrated Agriculture Finance Structure iv. Ownership Based Financing
  4. 4. Credit needs of Value Chains 4
  5. 5. I Rabo Rural Fund (guarantees) In many (developing) countries the agricultural sector lacks sufficient and affordable financing: o Limited involvement of local banks o Heavy collateral conditions/ and high financing costs o Transaction size often too small for foreign banks o High dependence on expensive intermediaries However:  Increasing long term off-take commitments from food processors and retailers  Premium prices for special and sustainable products 5
  6. 6. I Guarantee structure RABOBANK (i.c.w. Dutch Ministry of Foreign Affairs/DGIS & NGOs) Fund-management + Participation Funding Guarantee (25-85 %) RABO Rural Fund IN CASE OF CLAIM Local Intermediary Lender TRIANGULAR AGREEMENT Credit Appraisal Collateral Eligible Borrowers (Certified Producers) 6 Credit
  7. 7. II Warehouse Receipt Program Warehouse Receipt Program, to allow agricultural producers and processors to obtain working capital by using agricultural products stored in licensed warehouses as collateral. Based on:  Creation of appropriate legal framework  Out-of-court enforcement procedures  Certification of warehouses  Organization of Indemnity Fund 7
  8. 8. II Warehouse Receipt Program The implementation has been very successful, with substantial increase in finance activity. It provides good platform for financial institutions including Rabobank to expand exposure and increase liquidity in the agricultural value chain. 8
  9. 9. III Integrated Agriculture Finance Structure “from crop to cup” Objectives:  Risk mitigation for farmer financing  Secure good quality raw material for processors  Improve market position for equipment suppliers  Effective involvement of the bank in the agricultural value chain 9
  10. 10. III Integrated Agriculture Finance Structure Mechanism:  Down-payment by the farmer  Repurchase agreement from equipment supplier  First loss guarantee from processor  Insurance and maintenance contract 10
  11. 11. IV Ownership Based Financing of Agricultural Commodities Objectives:  Mitigate legal and regulatory issues  Improve the company’s balance sheet structure Conditions:  Liquid commodity markets  Effective risk mitigation: price risk hedging, quality certification, warehousing, collateral management 11
  12. 12. Thank you, Michaël de Groot 12

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