By Chinyere Anyanwu
A new loan from the International Finance Corporation to Olam Agri will be used to support the delivery of millions of tons of food staples to developing countries, potentially feeding more than 40 million people at a time of heightened food insecurity around the world, according to the company.
The International Finance Corporation (IFC), focused on the private sector in emerging markets, had agreed to provide a loan of up to $200 million to Olam Agri, the agribusiness subsidiary of the Singaporean Olam group.
The loan will be used to finance the purchase of wheat, corn and soybeans in Canada, Germany, Latvia, Lithuania and the United States for delivery to the company’s processing operations and to customers in developing countries who highly dependent 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 who have been hard hit by food inflation. Food prices have increased significantly over the past two years, driven by the effects of COVID-19, adverse weather events and the war in Ukraine.
The number of food insecure people around the world has been increasing every year since the start of the COVID-19 pandemic, and more than half of the world’s countries are experiencing a worsening of the situation. According to the Food and Agriculture Organization of the United Nations (FAO), around 928 million people were severely food insecure in 2020, an increase of 148 million from 2019.
The situation has been exacerbated by the war in Ukraine, which has impacted the exports of this Eastern European country and Russia, which collectively produce many of the main food products, including wheat and corn, as well as energy, fertilizer and key components for fertilizer production. , resulting in increased production and transportation costs.
Adverse weather conditions and droughts in major producing countries, including Argentina, Brazil and the United States, have worsened the outlook, prompting calls for action from the public and private sectors.
The loan to Olam Agri will further support key food flows to developing countries, which have depended on supplies from the Black Sea region. The objective is to help mitigate food price inflation, particularly in fragile, conflict-affected and poorer countries that are net food importers, are among the most affected and where food purchases food accounts for a disproportionate share of disposable income.
“This facility further helps us continue to provide staple crops and food security to some of the most populous countries in Asia and Africa most at risk of global food inflation,” said N Muthukumar, General Manager of Operations at Olam Agri. . He added: “We are delighted to continue our long-standing partnership with IFC, in line with Olam Agri’s focus on improving access to food and nutrition for the most vulnerable and strengthening food security. world food.
Rana Karadsheh, Regional Director for Industry, Manufacturing, Agribusiness and Services, Asia-Pacific at IFC, said: “The impacts of the COVID-19 pandemic, the war in Ukraine and climate change are having disastrous effects on food security in developing countries, wiping out years of hard-won development gains. Our partnerships with key agricultural commodity trading companies such as Olam Agri are key to maintaining the flow of essential foodstuffs between surplus and deficit countries, ensuring better food security for the poorest and most vulnerable people in the world. world.
IFC has a proven track record of supporting Singapore-based businesses in their efforts to expand into Emerging Markets and Developing Economies (EMDEs) globally, using innovative structures, in-currency financing solutions community, access to capital markets and the knowledge acquired over more than six decades of creating markets and opportunities around the world. It has provided over $5 billion in commitments to Singaporean clients in the past decade alone to support their expansion into EMDEs.