Insert your presentation title here MICHAËL DE GROOT 29 October 2004 Agri Revolution MICHAËL DE GROOT Cartagena 18 Oct 2013 Rabobank

Global Challenges

Financing the Agricultural Value Chain The experience of an international bank in building and integrating a more efficient agricultural supply chain environment. Rabobank’s position in the agricultural value chain Four examples: Rural Fund / Guarantees Warehouse Receipt Finance Integrated Agriculture Finance Structure Ownership Based Financing

Credit needs of Value Chains

I Rabo Rural Fund (guarantees) In many (developing) countries the agricultural sector lacks sufficient and affordable financing: Limited involvement of local banks Heavy collateral conditions/ and high financing costs Transaction size often too small for foreign banks High dependence on expensive intermediaries However: Increasing long term off-take commitments from food processors and retailers Premium prices for special and sustainable products

I Guarantee structure Fund-management + Participation Funding RABOBANK (i.c.w. Dutch Ministry of Foreign Affairs/DGIS & NGOs) Fund-management + Participation Funding Guarantee (25-85 %) RABO Rural Fund Local Intermediary Lender IN CASE OF CLAIM TRIANGULAR AGREEMENT Credit Credit Appraisal Collateral Eligible Borrowers (Certified Producers)

II Warehouse Receipt Program Warehouse Receipt Program, to allow agricultural producers and processors to obtain working capital by using agricultural products stored in licensed warehouses as collateral. Based on: Creation of appropriate legal framework Out-of-court enforcement procedures Certification of warehouses Organization of Indemnity Fund

II Warehouse Receipt Program The implementation has been very successful, with substantial increase in finance activity. It provides good platform for financial institutions including Rabobank to expand exposure and increase liquidity in the agricultural value chain.

III Integrated Agriculture Finance Structure “from crop to cup” Objectives: Risk mitigation for farmer financing Secure good quality raw material for processors Improve market position for equipment suppliers Effective involvement of the bank in the agricultural value chain

III Integrated Agriculture Finance Structure Mechanism: Down-payment by the farmer Repurchase agreement from equipment supplier First loss guarantee from processor Insurance and maintenance contract

IV Ownership Based Financing of Agricultural Commodities Objectives: Mitigate legal and regulatory issues Improve the company’s balance sheet structure Conditions: Liquid commodity markets Effective risk mitigation: price risk hedging, quality certification, warehousing, collateral management

Thank you, Michaël de Groot