ACCESS TO POST-HARVEST INFRASTRUCTURE FINANCE FOR SMALL AND MEDIUM PRODUCERS

dropped

Failure

The proposed project will establish a line of credit of US$300.0 million in the National Agricultural, Rural, Forestry and FishingDevelopment (FND, future Financiera Nacional Agropecuaria, FINAGRO) supported by an IBRD loan. FND will also make an in-kindcontribution of US$5M for management and development of the information systems and a Project Management Unit (PMU). The estimatedtotal project cost of US$360 million includes counterpart contributions from beneficiaries. The direct beneficiaries ParticipatingFinancial Intermediaries (PFIs) and their sub-borrowers; medium semi-commercial and commercial agricultural producers defined asRural Productive Units (RPUs) associated with grain and dairy sectors. The credits will specifically support investments ingrain-storage and dairy cold-chain. It will depend on the project design up to what point micro and small level RPUs will be ableto access the credits. In every case, it is expected they can benefit through potential association with the borrowing RPUs and theprocess of aggregation of value to grains and milk. Rural agri-food development provides an opportunity to address jobs andeconomic growth, contributing to socio-economic stability, environmental resilience and food security. Agriculture in Mexicorepresents a substantial share of natural resource use by millions of RPUs, while agriculture is highly vulnerable to climatechange. Storage infrastructure for agricultural products is inadequate in Mexico, with remarkable variation between regions andstates. Integrating formal financial products and services into agri-food systems can improve the socio-economic conditions ofproducers while improving food security and generating income opportunities. FND is a key national vehicle foragriculture-related infrastructure investments and related technical capacity building for rural financial intermediaries throughwhich it operates as a second-tier bank. Currently, FND is undergoing a process of institutional transformation into a largerentity, FINAGRO. The PFIs include a range of institution types and sizes across the country, including credit unions, cooperatives,deposit warehouses, financial societies of multiple objectives (SOFOMES), agricultural producer associations, and commercial banksserving the rural economy. The beneficiary PFIs will be carefully selected by FND based on their financial health, institutionalcapacity to on-lend, governance, and operational processes. During project preparation, the Bank will agree with FND on morespecific eligibility criteria for PFIs and sub-borrowers, including on environmental and social (E&S) risk managementcapacity.Adding challenges in rural Mexico, on March 11, 2020 the World Health Organization declared a novel coronavirus 2019(COVID-19) a pandemic, which is expected to have a major impact on Mexican agriculture affecting all size of players. The projectwill support credit-worthy enterprises in the agriculture sector to recover from economic impacts of the pandemic. The project isaligned with the World Bank Group’s Mexico Country Partnership Framework (CPF) for FY2020-2025 (Report No. 137429-MX), whichsupports the National Development Plan (2019-2024). Among the three CPF focus areas of engagement, the project contributes to thefirst related to supporting inclusive growth and its objectives to (i) foster financial inclusion and (ii) reduce structuralimpediments to productivity growth, and the third on promoting inclusive and sustainable development and its objective to providemore inclusive and sustainable infrastructure services. The CPF highlights the role of the WBG to seek opportunities to crowd-inprivate investments.

FY17 - Agriculture, Fishing and Forestry

World Bank Group

Project

Raw Materials, Consumer Products, Commercial, Government