The European Bank for Reconstruction and Development’s agricultural investments through 2023 will be guided by a strengthened focus on inclusion, sustainability and technology transfer, according to its director of agribusiness.
Speaking to Agri Investor earlier this month following the publication in October of the EBRD’s Agribusiness Sector Strategy 2019 – 2023, Natalya Zhukova said the plan calls for a continuation of the current pace of agribusiness investment, which last year amounted to about €800 million across about 60 transactions.
While the EBRD’s agribusiness investments have historically averaged about €20 million each, Zhukova also said the new strategy will likely see the EBRD continue its evolution towards 2018’s smaller average deal size of €13 million.
The 2019-2023 strategy document explains that in smaller countries of Central Asia and the Southern Mediterranean that are at earlier stages of their development, the EBRD’s agribusiness investments are likely to focus on transport infrastructure connecting rural and urban regions. In the Near East, North Africa and Eastern Europe, the strategy explains, focus will likely remain on investments that can address the exclusion of rural populations from economic growth.
Whereas the prior iteration of the document guided EBRD’s agribusiness investment between 2010 and 2018 and was heavily influenced by then-current fears of price spikes and threats to food security, Zhukova said the new strategy focuses more on interlinked challenges likely to shape agriculture over the next 50 years. She described how an examination of population growth, evolving global diets and natural resource scarcity translated into an EBRD strategy that aims to be “responsible”, “sustainable” and “innovative.”
As a result, Zhukova said the EBRD’s focus has shifted to making sure it is not only supporting private investment to bring innovative technology into developing countries, but also supporting the inclusion of young people and women, and the development of supportive policy, required to make use of technology sustainable over the long term.
“To us, innovation is not only about technology, it’s about a mindset as well,” she said. “It requires a lot of effort to make sure that there is a way for agribusiness to use new technology where it is not always the case.”
Though its fundamental approach to the sector has not changed, Zhukova said the new strategy’s focus on inclusion and technology transfer does encourage the EBRD to continue exploring new ways to use technical cooperation funds and partnership with other institutions to encourage sustainability.
Zhukova highlighted that a $150 million loan to agricultural commodity trader Olam Group approved in January also included a capacity-building component and that a $25 million loan to a Turkish dairy producer extended in 2017 utilized funding from the Clean Technology Fund and the Near Zero Waste program.
“This element of EU grant funding helps us to blend our commercial terms with something that serves as an incentive – to farmers, to small players or even to the larger players – to invest into something they would not invest in otherwise,” she said.
Though EBRD will continue to focus largely on financing private sector initiatives, Zhukova said, the London-headquartered organization is also considering the potential for participation in ag-focused sovereign lending, with North Africa the region most likely to benefit first.
“Looking at challenges like biodiversity and soil erosion, we believe that these are issues that cannot be solved only by private sector investment, they need sovereign lending scale as well, ” Zhukova said.