Niraj_Shah IFC Presentation Mentions Jain Irrigation

8/3/2019 Niraj_Shah IFC Presentation Mentions Jain Irrigation

http://slidepdf.com/reader/full/nirajshah-ifc-presentation-mentions-jain-irrigation 1/18

IFC Global Agribusiness

ASSOCHAM 2nd International Summit cum ExhibitionProcessed Food, Agribusiness & Beverages

Investments and Business Opportunities

September 15, 2010

Niraj H ShahSenior Investment Officer

IFC South Asia Department



IFC’s Products and Services

SeniorDebt

Global TradeFinance Program

StructuredFinance

MezzanineFinance

PrivateEquity

• On-lending

• Liquidity management

• Acquisition financing

• Warehousing facilities

• Syndicated loans

• Partial creditguarantees

• Securitization

• Bond underwriting

• CreditEnhancement

• Convertible debt

• Subordinated debt

• Other Tier IIinstruments

• Common shares

• Preferred shares

• $1 billion program

• Guarantees to issuing banks

• 46 issuing banks in 24

countries

• 92 confirming banks in 62countries

• $579 million of issuedguarantees in first 12 months

AdvisoryServices

• Corporate governance

• Risk management

• Small and medium

business banking

• Housing finance

• Energy efficiency finance

SustainableFinance

• Carbon finance

• Renewable energy

• Supply chain financing

• Cleaner production

4



IFC’s Goal: Deliver development impact along the global agri-supply chain, through

investments and advisory services with the private sector, to createopportunities and improve peoples’ lives

FinancialInstitutions

MarketInfrastructure

FarmProduction

Inputs Collection Processing Marketing Distribution

Risk Sharing Facilities

Pre-Harvest Finance Trade Finance

Fertilizersand otherChemicals

Land

Project/Corporate Finance

Retail

Infrastructure/Logistics

CIT–

Access to Markets

IFC’s investments in the Agribusiness valuechain exceeded US$2.0 billion in FY2010

5



IFC Agribusiness Portfolio OverviewAgri-related Investments

(including Syndications)

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

$

M i l l i o n s

IFC'S COMMITMENTS IN AGRIBUSINESS BY FISCAL YEAR

Agri-Wholesaling

Rural and Trade Finance

Fertilizers

Food Retail

Agri Infrastructure

Equity FundsAgribusiness Production & Processing

2.0 bn

1.4 bn1.3 bn

848 m

483 m

546 m

347 m

304 m

120 m

406 m

2.0 bn

The active portfolio of agri-related investments was

$3.9 billion at FYE10 (excludes Trade Finance)IFC has significantly increased its agri-financing in recent years

6

Africa6% Middle

East/NorthAfrica

2%South Asia

11%

East Asia11%

LatinAmerica

45%

Europe andCentral

Asia25%

IFC'S AGRIBUSINESS PORTFOLIO BY REGION

Food Retail12%

Fertilizers

6%Agri

Infrastructure4%

AgribusinessProduction

andProcessing

75%

EquityFunds

3%

IFC'S AGRIBUSINESS PORTFOLIO BY SECTOR



Technical Assistance is a significant part of IFC’s

contribution

Bertin, BrazilPilot project with Bertin to create a

Sustainable Cattle Ranching Model in the Amazon.

Mars, IndonesiaPartnership w/Mars Symbio Sciences

focusing on sustainable cocoa and more recently sustainable mariculture

North Andre, ChinaDevelopment of a traceability

system to enable small farmers to meet GLOBALGAP standard in the apple sector

ECOM, Africa/AsiaEstablishing Farmer Training Centers to support small farmers to increase

productivity, improve quality and meet international standards

7



8

Global Agri-Snapshot



Dynamics of global food prices have becomemuch more complicated

9

• Increasing speculation by financialplayers

• Increasing trade protectionism

•Rising correlation with oil prices

Feedback Loops

•Further productivity improvements

•Availability of additional land

•Availability of water

•Diverting land for biofuels

Key Supply Drivers

•A severe El Niño (or similar) event

•Climate change

•A renewed surge in oil prices

•A sharp depreciation of US dollar

Uncertainties

•Population and income growth,especially in Asia

•Shifting diets; more protein, edibleoils, and processed foods

•Diverting food commodities for biofuelproduction

Key Demand Drivers

Source:Modified from Nomura Global Economics

Priceof

Food



Global Snapshot – 2010

10

• Global alert for grain price spikes, althoughnot expected to 2008-09 levels

• 40% drop in production in major grain areasof Russia and Kazakhstan due to droughtand excessive heat; announced export bans

of wheat for rest of 2010.

• Drops in output throughout Europe, but notto these levels, leads to precarious globalgrains situation which will depend onSouthern Hemisphere supplies (Australia &

Argentina)

Current Prices are rapidlyapproaching pre-2008 highs



Main Issues in Global Agri-IndustryIncreasing role for BRICs

11

• Volatility in the commodity markets to continue

• Increased focus on land and agri-commodities as an investment class

• Sovereign Wealth Funds interested in large scale land investments in regionswhere land is available to address food security

• Emergence of regional Latin America and Asian players (e.g., JBS, Marfrig,Olam, Wilmar, Mengniu, Yili) as global leaders

• Brazil: Agri-players in particular consolidating and globalizing, becomingmajor international players; but infrastructure still needs to improve

• Russia: Structurally changed to become a large exporter of grains, incontrast to high dependence on imports in 1970s

• China: Growing industrialization and demand continues to influence globalprices

• India: In contrast, agri-markets more focused internally and sensitive tolocal climatic and economic conditions



• World food production needs to double within 30 years

• Yet, pressure on natural resources is increasing:• 40% of the world’s crop and pasture land is degraded, 8 million ha of cropland lost to

urbanization, roads, etc every year

• Agriculture accounts for nearly 70% of global water use

• By 2025, some 48 countries and 1.4 billion people will experience water stress or scarcity,the majority of those will be in emerging markets

• 25% of world’s marine fish stocks are overexploited; an additional 50% are fully exploited• Biodiversity/deforestation issues in major emerging markets (Brazil, Indonesia)

• Climate change is a looming threat to agriculture and food supply

• Biofuels are becoming increasingly contentious in the environment of rising food prices

• Global trade liberalization and subsidy elimination are important issues in dealing withthe global food crisis.

Intensification, resource efficiency andsustainability are core issues for

agribusiness and rural development

The Sustainability Challenge

12



Food insecurity particularly impacts developing countries

13



Strategic Context for IFC

14

• Agricultural Development Aid plunged from around 17% of total development

aid in 1980 to 3.8% in 2006.

• A renewed international commitment to Food and Agriculture is at the centreof the global development agenda.

• FAO estimates that the world will need to boost agricultural investment to

$83 billion a year by 2050, a 50% increase over the last decade’s averageinvestments to feed a growing population.

• Most of the additional investment is expected to come from the privatesector - from small farmers to large agribusiness companies.

• IFC’s role is to work with the private sector in promoting sustainableagribusiness in emerging markets.



Examples of existing Agribusiness projects

15



Poultry sectorSuguna (India) – 2007

IFC Role

• Long-term partner for mid-tier

growth company preparing for IPO

• Sharing of poultry sector expertise

• Corporate governance bestpractices in preparation for IPO

500DirectJobs

Created

3,600Total

Employees

Employment Creation

24,000FarmersReached

$300 avgmonthlyincome /farmer

Farmers Reached

600Wholesale

Distributors

12,000Suguna-brandedlive birdkiosks

SMEs Reached

AvianInfluenza

Management

Biosecurity- SupplyChainMgmt

Technical Assistance

The Project$154 million project to more than double sales for India’s

pioneer and market leader in integrated poultry production.The company’s direct purchasing provides farmer incomes andits backbone kiosk structure provides employment for retailers.

• $35m Preferred Shares

• $18.4m A Loan

16



IrrigationJain (India) – 2008-10

IFC Role

• Global agribusiness partner as thecompany expands internationally

• Implement environmental andsocial best practices & guidelines

5,600TotalDirectJobs

Improvedlivelihoods

Employment

2,300contractfarmersreached

Improvedincomes

Farmers Reached

Cleanerproduction

technologies

Technical Assistance

The ProjectJain Irrigation Systems (JIS) is India’s largest provider of micro

irrigation systems (MIS). JIS is growing rapidly and expandingits manufacturing capacities for MIS as well as its processed

fruits and vegetable production. Agriculture uses 80% of waterin India; meanwhile less than 5% of India’s irrigated land is

MIS, which increases water use efficiency 80-95%.

• $60m A loan (4 loans)

•$14.5 m Equity

Reducedemand for

waterthroughefficientdelivery

Environmental

17



IFC Role

• Corporate Governance advisoryservices for company and sector

• Support a leading regional player

• Long-term financing in a difficultlocal market

4,100 Full-Time Jobs+5,000

Seasonal

Jobs andtraining

Employment Creation

The ProjectExpansion of one of the leading branded food and beverage producers

in Bangladesh. The US$52 million project increases productioncapacity in rice processing, snacks and confectionary, beverages, and

dairy, while addressing permanent working capital needs.

2009

• Loan of $15 million

Suppliesfrom9,750

farmers

Pran buyshalf the

processedhorticulturein country

Farmer Benefits

Packaged and Processed FoodPran Foods (Bangladesh) - 2009

1,900exclusive

distributors

Distributionnetwork provides

backbone fordomestic value

chain

SME Benefits

18



Fruit Juices sectorNorth Andre (China) - 2005

The ProjectNorth Andre is a leader in China’s concentrated apple juice

industry.$96.7 million project to expand operations (expand 1 existingplant and 3 greenfield plants) and support capital structure,

including working capital - replacing short term debt.

• $15m A loan (2005)

IFC Role

• Provide long-term financing not

available in local market

• Sustainable development of commercial apple sector

• Demonstration effect of social andenvironmental policies/guidelines

400 JobsCreated,850 Total

SeasonalEmployees

Employment Creation

25,000FarmersReached

Farmerfinancing;foster newvarieties

Farmers Reached

ISO 9000:2000 andHACCPcertified

Supplierrelationsw/globalplayers

Quality Management

SMELinkages

IFC TechnicalAssistance-Traceability

Sustainable Development

19



20

Niraj H Shah

Senior Investment Officer

South Asia Department

[email protected]

Thank You

Documents

Niraj_Shah IFC Presentation Mentions Jain Irrigation