Olam Smallholder Crop Financing

completed

 The proposed transaction is an unsecured corporate loan of up to US$120 million to Olam to finance Olam’s procurement of crops (e.g. cashew, cocoa, coffee, cotton, and spices) primarily grown by smallholder farmers in IDA countries, e.g. Timor-Leste, Papua New Guinea (also FCS), Uganda, and Vietnam and Indonesia. This supports Olam’s efforts to create markets for smallholders in IDA countries, most of whom are unbanked or disconnected from financial systems, and is expected to benefit approximatively 40,000 smallholder farmers. The Japanese International Cooperation Agency (JICA) is expected to provide a loan of $US80 million alongside the IFC investment.  The targeted commodities to be included within the scope of this funding line are, sorted by country, coffee in Timor Leste, supporting 1,000 farmers; cocoa and coffee in Papua New Guinea (PNG), supporting 4,000 farmers; cotton in Uganda, supporting 250 farmers; coffee, cashew and spices in Vietnam, supporting 21,000 farmers, and cocoa and coffee in Indonesia, supporting 13,000 farmers. Based on an average of 1 hectare of productive land per smallholder, estimated 40,000 ha could be impacted by this investment.   Headquartered in Singapore and listed on the Singapore Exchange (SGX), Olam is a vertically integrated multinational agri-business company operating worldwide. Its global footprint encompasses all segments of agro-commodity value chains, from upstream (plantations, concessions, farms) operations, covering 2.4 million hectares, including 1.3 million ha of Forest Stewardship Council (FSC) certified tropical forestry concessions; midstream operations, including 204 Tiers I and II agro-processing facilities located in countries of origin to maximize value-addition and job creation; and, finally agro-commodity sourcing covering 47 agricultural raw materials and food ingredients organized across 18 platforms and operating in 66 countries of origin. Olam sources from approximately 4.7 million farmers worldwide. Olam supplies raw and processed goods to more than 22,000 customers (e.g. Unilever, Nestle, Coca-Cola, and Costco).  This would be IFC’s third investment in Olam since 2013, following a corporate loan investment of US$120 million which was approved in 2013 and repaid in 2015 and a second corporate loan investment of US$175 million approved in 2016 with specific use of proceeds in respect of four operations, namely (i) India – Hemarus Sugar Mill Limited (HIL), (ii) India – Spices Processing Facility (SVI), (iii) Nigeria – Crown Flour Mill (CFM), and (iv) Nigeria – Sesame Processing plant. Olam’s EHS performance against IFC’s Performance Standards requirements and implementation of E&S Action Plan (ESAP) has been satisfactory, though some ESAP items agreed for the second corporate loan have yet to be fully completed.