Associacion Union Tamberos Cooperativa Ltda. (A.U.T.L.)

completed

Summary Of Project Information (SPI)Project NameARGENTINA - Associacion Union Tamberos Coop. Ltda (AUTCL)     RegionLatin America & CaribbeanSectorProject No008836Projected Board DateApril 1, 1998Company NameAssociacion Union Tamberos Coop. Ltda (AUTCL)Technical Partner and/or Major Shareholders The Association Union Tamberos (“AUTCL” or the “Cooperative”) is an Argentine dairy cooperative established in 1925 by farmers of Swiss and Italian origin. The cooperative has currently 1,237 dairy farms as members. In 1995, the Cooperative’s General Assembly approved the spin-off of its industrial assets into a common stock company, Milkaut S.A. (the “Company”). Following the spin-off, Milkaut S.A. launch a US$44.5 million investment program which was financed in 1996 by IFC. The Company now operates 7 industrial plants and processes 1,100,000 liters of milk per day supplied exclusively by the cooperative. AUTCL, with annual consolidated sales of US$150 million, currently ranks third in the Argentine dairy sector.Milkaut’s product line covers the whole spectrum of dairy products: butter, cheese, pasteurized and U.H.T. milk, yogurt, cream, dulce de leche (a caramelized condensed milk), custards, milk powder, milk protein and lactose.      Project Cost Including Proposed IFC Investment The total investments made by the farmers during the project is estimated at US$ 28 millions. IFC loan will finance around 43% of total on-farm investment, while 57 % will come from the farmers’ own resources. The average size of loan per farmer will be around US$ 40 000 mainly to finance the upgrading of production facilities, pasture improvements and the purchase of milking and cooling equipment.Location of Project and Description of Site 90% of the farmers which will benefit from the dairy facility are located within a radius of 60 miles from the Cooperative’s plants in Franck, in the province of Santa Fe.Description of Company and Purpose of Project This facility totaling up to US$12 million will finance capital investment requirements of about 300 members of the Cooperative representing 25% of its existing members. The objective of the credit program is to secure the long term supply of milk to the cooperative by (i) increasing the future competitiveness of the dairy farmers by improving production per cow and per person employed in the dairy operation; (ii) increasing the net profit per cow and per ha of forrage crop used; and (iii) improving the milk quality by safeguarding the hygienic handling of milk at the farm.      IFC is interested in extending its reach to the dairy farmers members of Milkaut. This will help the cooperative to consolidate its relationship with its suppliers and to better control raw material prices in the future.With the help of IFC, Milkaut’s farmers will be able to increase their future competitiveness, their milk sales, and their net income By using a leading Argentine bank as agent, IFC wants to demonstrate the administration of such a loan package is profitable, and hopefully will encourage the local bank to provide similar loans in the future without IFC intervention. It will also provide direct financing to farmers in a practical, efficient and cost-effective manner while only assuming the risk of the sponsor and the bank. Also, IFC will confirm its commitment to successful primary agriculture which, in this case, has been the basis for Argentine competitiveness in dairy.Environmental Category and Issues This is a Financial Intermediary (FI) project according to IFC’s environmental review procedure. Some specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of the technical appraisal and site review completed by IFC’s Agribusiness Department staff. The following potential environmental, health and safety impacts of this project were analyzed: site location, air emissions, refrigerant usage, liquid effluents, solid waste management, noise control, and general employee training, health and safety.Information provided on how these potential impacts would be addressed in the AUTCL project: As part of the local approval process Milkaut’s technical team will assure that prior to loan disbursement all environmental issues have been satisfactorily addressed. As outlined in the attached questionnaire, no loans will be disbursed unless: the refrigeration equipment in the milk storage tanks will use an environmentally friendly coolant; the waste water from cleaning the milking equipment is disposed of in a septic tank or equivalent; the stocking density of livestock is low enough to avoid a high concentration of solid waste on the lands. As an ongoing process Milkaut’s technical team routinely visit the members farms to advice on animal husbandry practices, milk hygiene, feed supply, and breeding policy. In the future this team will also ensure that the loan recipient will continue to conform with the environmental guidelines of the project. IFC will ensure ongoing compliance with World Bank environmental, health and safety policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by Milkaut, and by conducting periodic supervision.      Date SPI sent to InfoShop Revised February 10, 1998April 14, 1998“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384