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

2. Global Challenges

3. 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

4. Credit needs of Value Chains

5. 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

6. 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)

7. 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

8. 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.

9. 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

10. 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

11. 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

12. Thank you, Michaël de Groot