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FMO provides $10m loan to Agrofertil

A $10m loan from FMO will be used to help support farmers in Paraguay and help ensure sustainability in the nation's agribusiness sector.

A Dutch development bank has provided a loan designed to improve environmental and financial support for farmers in Paraguay.

FMO announced on 31 October that it has provided a $10 million loan to Agrofertil, a crop input distributor in Paraguay. The five-year loan will be used as working capital to increase pre-harvest financing to farmers in the South American country.

As part of the loan agreement, Agrofertil has agreed to establish a verification system used to ensure that crops from farms made up of significant portions of land that has recently been converted from natural habitat are not commercialized, according to the statement. That system is part of FMO’s effort to help ensure that Paraguay’s agribusiness sector develops sustainably and both new Agrofertil clients and existing clients that are expanding their operations make efforts to monitor their entire supply chains.

“FMO is proud to play a part in increasing the ability of Agrofertil to support farmers as well as supporting the dissemination of agricultural best practices and inputs to farmers,” FMO director of agribusiness Suzanne Gaboury said.

Agrofertil distributes fertilisers, crop protection products, seeds and agronomic services to more than 1,800 small and medium sized farmers in Paraguay. It maintains a network of 20 distribution centers, including 14 with storage silos near major crop regions.

Paraguay is the world’s fourth largest exporter of soybeans. While the country has a reputation for crime and corruption and has suffered from foot and mouth disease outbreaks and drought, the investment environment has improved in recent years, according to a commentary from Lennart Stahr of Southern Connections Agro Consulting and Management. Stahr highlighted the country’s comprehensive legal system and protections for foreign investors in Paraguay as helping explain the increase in farmland prices in recent years.

FMO is a Dutch private sector development bank that looks to invest in sectors where long-term impact is most achievable such as financial institutions, energy and agribusiness. Its investment portfolio totals €8.9 billion and includes projects in more than 85 countries.