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IFC Increases Support for Agribusiness in Response to High Food Prices 29.09.2008

IFC, a member of the World Bank Group, is responding to the global rise in food prices with more support for agribusiness and a market-driven, private sector-led strategy to increase the food supply in developing countries.

In fiscal 2008 (ended June 30), IFC invested $1.4 billion along the agribusiness supply chain - from farm to retail - to help boost production, increase liquidity, improve logistics and distribution, and expand access to credit for small farmers. IFC invested nearly $900 million directly in agribusiness companies and an additional $91 million to support agricultural infrastructure, food retail, equity investments, and fertilizer production. Through partner banks, IFC channeled $414 million to support rural farmers and trade finance activities. More than 40 percent of IFC’s agribusiness projects were in low-income countries.

"High food prices are causing severe hardship for millions of people. IFC works to address the challenges by helping the emerging markets grow and develop their agricultural sectors," said Oscar Chemerinski, IFC Director for Global Agribusiness. "This can help increase the food supply and reduce poverty in rural areas while linking local farmers to markets, improving consumer access to competitively priced food, and creating new export sectors. IFC is helping emerging economies capitalize on these opportunities."

With food prices expected to remain high over the next few years, IFC is leading the World Bank Group’s efforts to support the private sector to find ways to increase production. In the short term, IFC is providing investments and advisory services to firms that can help increase production in middle-income countries that have strong agribusiness potential. These include Argentina, Brazil, Kazakhstan, Russia, Ukraine, and Uruguay.

IFC is also offering working capital to help clients prefinance inventories and inputs for farmers, as well as helping improve access to credit. IFC is investing in food retailers that offer competitively priced food products and working to strengthen links between food retailers and local producers.

Over the longer term, IFC will scale up financing for agribusiness and address critical constraints in Africa. Efforts will include bringing unused land into production, improving productivity by transferring technologies to poor countries, and making the best use of water and other resources. IFC will also pursue investments in infrastructure (ports, warehouses, cold storage, telecommunications) that can facilitate and lower the costs of agricultural trade. For more impact on small farmers and rural enterprises, IFC will increase its wholesaling work through trading companies and financial intermediaries, including microfinance lenders, to help channel financing and advisory services.

About IFC

IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year.

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Ukraine became a shareholder and a member of IFC in 1993. As of June 30, 2008, IFC has invested around $988 million in 42 projects in the country. IFC’s investment program is expanding rapidly, with a focus on Ukraine’s financial, agribusiness, energy efficiency and cleaner production, and infrastructure sectors. In particular, IFC invested $208 million in 8 projects in Ukraine’s agribusiness. IFC’s strategy in Ukraine is to help reach its agricultural potential throughout the entire value chain through a combination of investment and advisory services.

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For investors: new entry
Novokahovskyi Lime-Sand Brick Plant

Purposes of company: Investments
Company description:

Market Overview:  Construction volume is increasing 20-25% annually, creating an increased demand for high quality façade bricks. The industrial capacity of façade bricks is estimated at 200 million bricks per year. In 2006, a construction boom is expected in southern Ukraine, where the plant is located. The product is used mainly by construction companies and private companies.

Project Overview:

  • Using KSE-400 (Germany)
  • Equipment supplier offers trainings for the buyer’s staff
  • Can produce 30 million bricks per year including high quality hollow façade bricks, ordinary bricks, molded bricks, white and colored bricks

Competitive Advantages:

  • Production of lime-sand bricks is considerably more energy efficient than the production of ceramic bricks. Moreover, the project envisions the reconstruction of one of the two pit-type 50-ton lime-burning kilns; using coal, automatic blending, loading, and burning will save on gas
  • Plant produces its own lime; a sand-pit is located close to the plant
  • No high quality lime-sand hollow bricks are produced in southern Ukraine
  • Due to the considerable decrease in the weight of the bricks, delivery and transportation becomes much easier; bricks can be transported by auto, railway (via the plant’s rail track), or by water (a river port is 8 km away)
    Investment Project Progress:  Market research has been conducted

Key Financials:

  • Total Investment - € 1.5 mln
  • Investment Needed - € 1.5 mln
  • Payoff period - 5 years

Branch: Construction materials
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Purposes of company: Investments
Company description:   
Branch: Construction materials
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For Buyers: new entry

Purposes of company: Export
Company description:  
Branch: Construction materials
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Purposes of company: Distribution
Branch: Furniture
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