Bank scheme to help Russia grain processors
November 01, 2002
by Emily Wilson
UTRECHT, NETHERLANDS — The European Bank for Reconstruction and Development and Rabobank, a leading agricultural bank, have signed an agreement providing up to U.S.$286 million in short term working capital to Russia for the 2002-03 agribusiness season.
This doubles the EBRD’s commitment to Rabobank’s existing Russian agrifinance program to U.S.$100 million from U.S.$50 million last year.
The main beneficiaries of the new program are Russian soft-commodity traders, food processors, sugar refineries, oilseed crushers and grain millers in the main agricultural centers of Russia. As such, the money will encourage development in Russia’s agribusiness sector.
The innovative Russian scheme, in which the EBRD and Rabobank are sharing risks, provides borrowers with a practical way of using harvested commodities as collateral so as to raise working capital. The shortage of such capital is a major constraint on the growth of the Russian agricultural sector.
The facility will support Rabobank’s Russian subsidiary to finance the purchase of sugar, wheat, sunflower seeds and other commodities and store the commodities in carefully selected warehouses, pending their repurchase by the original sellers. While in storage, the goods will be insured by reputable international insurance groups.
Rik van Slingelandt, acting chairman of Rabobank’s Executive Board, said he expected that by the end of 2002 Rabobank will have provided in excess of U.S.$300 million in finance to 12 EBRD projects in Russia, Ukraine and Kazhakstan.