By Chinyere Anyanwu 

A new International Finance Corporation loan to Olam Agri will be used  to support the delivery of millions of tonnes of staple foods to developing countries, potentially feeding over 40 million people at a time of heightened food insecurity around the world, according to the company.

The International Finance Corporation (IFC), focused on the private sector in emerging markets, had agreed to provide a loan of up to $200 million to Olam Agri, the food, feed and fibre agribusiness subsidiary of Singapore-based Olam Group.

The loan will be used to finance the purchase of wheat, maize and soy from Canada, Germany, Latvia, Lithuania, and the United States for delivery to the company’s processing operations and customers in developing countries that rely heavily on imports of these staple foods. These include Bangladesh, Cameroon, Chad, Egypt, Ghana, India, Indonesia, Nigeria, Pakistan, Senegal, Thailand and Turkey.

The project is part of IFC’s global efforts to address food insecurity, especially for poor and vulnerable populations that have been hit hard by food inflation. Food prices have risen significantly over the last two years, driven by the impacts of COVID-19, adverse climate events, and the war in Ukraine.

The number of food-insecure people in the world has been rising every year since the beginning of the COVID-19 pandemic, with more than half of countries globally experiencing a worsening situation. An estimated 928 million people were severely food insecure in 2020, according to the Food and Agriculture Organisation (FAO) of the United Nations, an increase of 148 million from 2019.

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The situation has been exacerbated by the war in Ukraine, which has impacted exports from the Eastern European country and Russia, which collectively produce a large share of key food commodities including wheat and maize as well as energy, fertiliser, and key components of fertiliser production, resulting in rising production and transportation costs.

Poor climate conditions and droughts in key producing countries including Argentina, Brazil and the United States have worsened the outlook, driving calls for action from the public and private sectors.

The loan to Olam Agri will further support flows of key food commodities to developing countries, which have been reliant on sourcing from the Black Sea region. The goal is to help ease food price inflation particularly in fragile, conflict-affected, and poorer countries that are net food importers, which are among the worst affected, and where food purchases comprise an outsized share of disposable incomes.

“This facility further supports us to continue to supply staple crops and ensure food security to some of the most populous countries in Asia and Africa most at risk of global food inflation,” said N. Muthukumar, Chief Executive Officer, Operations, at Olam Agri. He added: “We’re delighted to continue our long-standing partnership with IFC, aligning with Olam Agri’s focus on better access to food and nutrition for the most vulnerable and on strengthening global food security.”

Regional Industry Director, Manufacturing, Agribusiness and Services, Asia Pacific at IFC, Rana Karadsheh, said, “the impacts of the COVID-19 pandemic, the war in Ukraine, and climate change are having disastrous effects on food security for developing countries, erasing years of hard-won development gains. Our partnerships with key agricultural commodity-trading companies such as Olam Agri are crucial to maintaining the flow of critical food staples between countries with surpluses and deficits, ensuring better food security for the world’s poorest and most vulnerable populations.”

IFC has a successful track record of supporting Singapore-based companies in their efforts to expand in emerging markets and developing economies (EMDEs) globally, using innovative structures, local currency financing solutions, access to capital markets and knowledge gained from more than six decades creating markets and opportunities around the world. It has provided over $5 billion in commitments to Singaporean clients over the last decade alone to support their expansion into EMDEs.