A
new loan to Olam Agri, one of the world’s leading agribusinesses, will support the delivery of millions of tons
of staple foods to developing countries, potentially feeding over 40 million people at a time of heightened food insecurity around the world.
The International Finance Corporation (IFC), the largest global
development institution focused on the private
sector in emerging markets, has agreed to provide a loan of up to US$200
million to Olam Agri, the food, feed, and fiber agribusiness subsidiary of
Singapore-based Olam Group.
The loan will be used to finance the purchase of wheat, maize, and soy
from Canada, Germany, Latvia, Lithuania,
and the United States for delivery to the company’s processing operations and
customers in developing countries
that rely heavily on imports of these staple foods. These include Bangladesh, Cameroon,
Chad, Egypt, Ghana,
India, Indonesia, Nigeria,
Pakistan, Senegal, Thailand, and Turkey.
The
project is part of IFC’s global efforts to address food insecurity, especially
for poor and vulnerable populations
that have been hit hard by food inflation. Food prices have risen significantly
over the last two years, driven by the impacts of COVID-19, adverse climate events, and the war in Ukraine.
The number of food-insecure people in the world has been rising
every year since the beginning of the pandemic, with more than half of countries globally
experiencing a worsening
situation. An estimated 928 million people
were severely food insecure in 2020, according to the Food and Agriculture
Organization of the United Nations, an increase of 148 million
from 2019.
The situation has been exacerbated by the war in Ukraine, which has
impacted exports from the Eastern European country
and Russia, which collectively produce
a large share of key food commodities including wheat and
maize as well as energy, fertilizer, and key components of fertilizer
production, resulting in rising production and transportation costs.
Poor climate conditions and droughts in key producing countries
including Argentina, Brazil, and the United States have worsened the outlook,
driving calls for action from the public
and private sectors.
The
loan to Olam Agri will further support flows of key food commodities to
developing countries, which have
been reliant on sourcing from the Black Sea region. The goal is to help ease
food price inflation particularly in
fragile, conflict-affected, and poorer countries that are net-food importers,
which are among the worst affected,
and where food purchases comprise
an outsized share of disposable incomes.
“This facility further supports us to continue to supply staple
crops and ensure food security to some of the most populous countries in Asia and Africa most at risk of global
food inflation,” said N. Muthukumar, Chief Executive Officer,
Operations at Olam Agri “We’re delighted to continue our long-standing partnership with IFC, aligning with Olam
Agri’s focus on better access to food and nutrition for the most vulnerable and on strengthening global food security.”
“The
impacts of the COVID-19 pandemic, the war in Ukraine, and climate change are
having disastrous effects on food
security for developing countries, erasing years of hard-won development
gains,” said Rana Karadsheh, Regional Industry Director,
Manufacturing, Agribusiness and Services, Asia Pacific at IFC. “Our partnerships with key agricultural
commodity-trading companies such as Olam Agri are crucial to maintaining the flow of critical
food staples between
countries with surpluses
and deficits, ensuring
better food security for the world’s poorest and most
vulnerable populations.”
IFC
has a successful track record of supporting Singapore-based companies in their
efforts to expand in emerging
markets and developing economies
(EMDEs) globally, using innovative structures, local currency financing solutions, access to capital markets
and knowledge gained
from more than six decades
creating markets and
opportunities around the world. We have provided over US$5 billion in
commitments to Singaporean clients over the last decade alone to support their expansion into EMDEs.
About Olam Agri
Olam Agri is a market leading,
differentiated food, feed and fibre agri-business with a global origination footprint, processing capabilities and
deep understanding of market needs built over 33 years. With a strong presence in high-growth emerging
markets and products across grains & oilseeds, animal feed & protein,
rice, edible oils, specialty grains
& seeds, cotton,
wood products, rubber
and commodity financial
services, Olam Agri is at the heart of global food and agri-trade flows
with more than 40 million MT in volume
traded annually. Focused on transforming food, feed and fibre for a more
sustainable future, it aims at
creating value for customers, enable farming communities to prosper sustainably
and strive for a food-secure future. Olam Agri is a fully owned subsidiary of Olam Group.
For more information and to
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please visit https://www.olamagri.com/.
About IFC
IFC—a member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging
markets. We work in more than 100 countries, using our capital,
expertise, and influence to create markets
and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private
companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme
poverty and boost shared prosperity as economies grapple
with the impacts
of the COVID-19 pandemic. For more information, visit www.ifc.org.
