LATIN AMERICAN AGRIBUSINESS DEVELOPMENT CORPORATION LAAD

Transcription

1 LATIN AMERICAN AGRIBUSINESS DEVELOPMENT CORPORATION LAAD

2 TOPICS Key issues from past attempts to finance agriculture and rural sectors What are the best practices or models to deliver credit to the rural sector What are some innovative risk mitigation instruments to create a more attractive scenario to invest in Agriculture What are required policies to support financial institutions to develop and deliver better access to credit

3 Mission To promote the economic and social development of Latin America financing private agribusiness companies

4 LAAD Began in 1970 as a Result of the Effort and Commitment of 12 Companies Adela Investment Borden, Inc. Caterpillar Tractor Company Deere & Company Gerber Products Company Ralston Purina Company Bank of America Cargill, Inc. CPC International, Inc. Dow Chemical Company Monsanto Company Standard Fruit & Steamship Co. (DOLE)

5 More than 39 Years Later, LAAD s Current Shareholders Are Proof of Commitment and Success Rabobank Curacao, N.V. JPMorgan Deere & Company Gerber Products, Co.-A Nestle Co. DEG-Deutsche Investitions-und Entwicklungsgesellsch aft mbh Bank of America Cargill, Inc. Unilever Foods L.A. The Goodyear Tire & Rubber Company Monsanto Company Dole Food Company, Inc. I.F.C.International Finance Corporation

6 LAAD: The Direct Approach LAAD $ PROJECTS

7 LAAD: Channeling Credit Commercial Banks Central America Bonds LAAD South America CBI DEG FMO IFC IIC NORFUND USAID FINFUND The Caribbean

8 LAAD Field Offices Guatemala City Guatemala, Honduras, & El Salvador San Jose Costa Rica, Belize, Panama & Nicaragua Santo Domingo Dominican Republic & Venezuela

9 LAAD Field Offices Quito Ecuador & Colombia Brasilia Brazil Santa Cruz de la Sierra Bolivia Santiago Lima Montevideo Chile Peru Uruguay

10 LAAD s First Decade: The 70 s Issue Start-up company Net Worth (US$2.6M) No portfolio Action Plan Established partnership with USAID Preferential funding Increased Funding/Portfolio US$6 million (Central America) US$5 million (Central America) US$6 million (Caribbean and Panama)

11 LAAD s Second Decade: The 80 s Political / Economic Problems: Nicaragua - Sandinistas El Salvador - Civil War Guatemala - Social Unrest 40% of portfolio Lack of U.S. dollars High interest rates Action Plan Rescued blocked funds (US$0.50 freed/us$1.00 new) Diversification into South America Retention agreements w/exporters

12 LAAD S 3 rd and 4 th Decades: 1990 s-2000 s Opportunity in Latin American Growth: Democracy, Free trade policies Private investment Action Plan Strengthen funding USAID/935/Bond issue (US$25M) Commercial banks / Syndications (US$397M) Multilateral / Bilateral Institutions (US$78M) Increase Presence Honduras and Panama (1991) Bolivia (1992), Peru (1994) Ecuador (1997), Chile (1998) Uruguay (2003), Brazil (2004)

13 LAAD IN FIGURES Loan Amount US$MM Number of Projects ,579 Outstanding Portfolio US$ MM Net Worth US$ MM Jobs Created 80 9,000 27,000 47,000 83,000 Countries with operations R.O.E % 3% 9.40% 9.50% 11.10% 9.50%

14 Portfolio By Country

15 Industry Diversification

16 Product Diversification

17 LAAD S STRENGTHS Committed group of shareholders and Board of Directors (working Board) Management team with many years of banking and agricultural experience Focused on Agribusiness Lean Organization We provide prompt response to our client s needs We are flexible in hard times Very little red tape/very horizontal management structure We do not write long documents: We Keep It Simple

18 Creating an Enabling Environment for Investment in Agriculture Agriculture = Risk Profitability Challenge is to finish cycle Credit is not the solution i.e. National Development Bank (agriculture) Credit is only the complement Good project always get financing 4 Basic Pillars Market Technology Government Role People

19 Creating an Enabling Environment for Investment in Agriculture MARKET Backward approach Understand final consumer & clients Key risk reductor TECHNOLOGY Efficiency / productivity / cost Worldwide competitors not local Key risk reductor i.e. seeds, meristematic, clones, agricultural inputs Friendly with environment & energy consumer

20 Creating an Enabling Environment for Investment in Agriculture GOVERNMENT ROLE Local Policies Taxes / Labor / Legal System / Water Infrastructure Highways / Ports / Airports Define the big picture Competitive advantages / Local Markets PEOPLE Education Strength Universities and local schools of agriculture Support organizations Research & Development Promotion agencies Clusters organizations and Chambers

21 Creating an Enabling Environment for Investment in Agriculture CHALLENGES Weather Changing (floods, droughts, Nino) Technology (drainage, irrigation, rivers, information & data) What to produce and where Define one course of action Put together different views Strong leadership How to reach more people Great reward Model

22 RURAL FARMERS No influence over markets No access to latest technology Less educated group Credit Risk Profile is Very High

23 How to reach more people Monitoring of insurance, financial viability, sustainability Commodity Exchange Fixed Price Off-taker Farmers Local Companies Customers Forward Sale Agreement Hedge Account Foreign Exchange Optimizing through Precision Farming Agronomist, GIS Yield Insurance Policy Insurance Funding Local Banks

24 Thank You