20,000 farmers to enjoy $163-million sustainability financing

Coffee is one of the key agriculture export items of Vietnam

The Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) have just signed $163-million loan agreements with Olam International Limited (OIL) and Café Outspan Vietnam Limited (COVL), a subsidiary of OIL. The loans will help improve inclusive and sustainable agricultural value chains, directly benefiting up to 20,000 smallholder farmers in Vietnam, Indonesia, Papua New Guinea (PNG), and Timor-Leste.

ADB’s assistance includes an $83 million loan to OIL and a $5 million loan to COVL. The project is ADB’s first non-sovereign assistance directly co-financed by JICA, which will lend $75 million to COVL.

“Developing formal value chains is essential for farmers in the Asia-Pacific to integrate into the global economy and increase the value of their products,” said ADB investment specialist Juhyun Jeong. “ADB and JICA’s partnership with OIL and COVL will help smallholder farmers expand their production and operations, improving livelihoods by promoting inclusive and sustainable development.”

“Olam’s comprehensive and grassroots approach to improve agricultural value chains brings significant positive impacts to farmers and the agribusiness industry,” said JICA’s investment officer Gyo Shibata. “For the partnership with ADB’s private sector operations, we are excited to ink the first direct co-financing deal and explore further collaborations.”

“This loan agreement underpins the mutual aims of Olam, ADB, and JICA to support the economic prosperity of farmers as well as help them become stewards of the environment—which is essential for the future of agricultural production,” said Prakash Jhanwer, regional head for Southeast Asia at Olam International.

The Agricultural Value Chain Development Project will support OIL’s $211-million investment plan until 2019 by financing an expansion in the firm’s processing of midstream products, while providing permanent working capital investment for smallholder farmers, particularly in Indonesia (coffee and cocoa); PNG (coffee and cocoa); Timor-Leste (coffee); and Vietnam (coffee, cashew, and pepper). The assistance will also help OIL develop processing plants to create a more seamless integration of farmers, markets, and customers, adding more value in local markets and improving agricultural value chains.

The project includes $3 million in technical assistance (TA), partially financed by the Canadian Climate Fund for the Private Sector in Asia, to provide capacity building training to about 20,000 smallholder coffee farmers across the project countries. The TA includes training in avoiding deforestation and increasing productivity through climate-smart agricultural practices, including water harvesting and soil management.