The European Bank for Reconstruction and Development has approved a loan of up to $150 million – $25 million more than it was initially considering last October – to Olam Group, one of the world’s largest agricultural commodities traders.
“Funds will be deployed for expansion of Olam’s existing agri commodities procurement and processing operations in these countries,” an Olam spokesman told Agri Investor, referring to Egypt, Georgia, Poland, Turkey and Ukraine – five of the 70 countries in which the EBRD invests.
According to the development bank, $30 million of the total loan will support Olam’s activities in Egypt which focus on onion production. It did not provide specific figures for the rest of the loan amount and how it would be disbursed across Olam’s other four markets. A spokesperson for the bank was not available for comment.
“Over the past few years, we have established a strong business in vegetable dehydration, and have expanded the value chain to include onion farming in Egypt,” said Saurav Bhuwan, vice-president and country head for Olam Egypt. The company has also developed a non-GMO variety of onion seed that uses half the amount of water required for conventional production.
The balance of the loan will help Olam increase its procurement of dry dairy products and grain in Ukraine; hazelnuts in Georgia and Turkey – two of the world’s largest producers; and dry dairy products in Poland. Local Olam subsidiaries will take on the processing, storage and distribution of these goods.
This latest cash infusion is the second loan the EBRD has provided Olam. The first loan, of $128 million, was provided in 2010. It helped the Singaporean company expand its activities in Russia, Turkey and Ukraine. That loan has been repaid in full, according to Olam’s spokesman.
As for the agribusiness sector in general, the EBRD has invested more than €10.3 billion in more than 600 agribusiness projects to date. All the investments have been in the private sector, as the bank seeks to establish strong links between the private sector, governments and other development partners.
By supporting companies such as Olam in countries in which it invests, the EBRD aims to increase local sourcing of agricultural commodities while also boosting the export potential of those countries.