Application of Structured Finance in Agricultural Lending

Figure 4 shows some examples of practical arrangements applying the different products of SF.

The examples indicate some preference of donors, DFIs, and IFIs for portfolio guarantees and structured funds. While this might paint a realistic picture of activities in the field of development cooperation, we emphasize that the majority of SF products are used in commercial-value-chain financing arrangements. We estimate that these purely commercial, private sector-based activities are not as present in literature as programmes supported by development agencies.

While in many cases different SF products are combined in order to maximize their risk-mitigation potential, we discuss them first individually.

SF products

Selected examples of application

Parties involved (Donors, FIs, IFIs, private sector

Remarks

Agricultural (partial) Portfolio Guarantees

Sustainable Agriculture Guarantee Fund (SAGF); IFC – Financiera Compartamos (Mexico);

USAID – Standard Chartered Bank / PRIDE (Tanzania); Union Progreso (Mexico); SAID / CAFERWA / Rwanda (coffee); van Oers (Senegal); AGRA / IFAD /Standard Chartered;

Rabobank; IFC; USAID /

Development Credit Authority (DCA); Standard Chartered;

AgroAfrica Programme

DEG, Standard Chartered

Structured Funds

Rural Impulse Fund I and Rural Impulse Fund II

BIO, FMO, EIB, IFC,

KfW, Incofin and private investors

Securitization

Drokasa Peru;

IFC

Portfolios of commercial agribusiness

Livestock in Colombia

National Agriculture and Livestock Exchange; Trust as SPV

No agricultural loan portfolio securitization in developing and transition countries could be identified

Receivables-Backed Finance

Cedula Produto Rural in Brazil

Private sector

Warehouse Receipt Finance

Cedula Produto Rural in Brazil;

Government, Private sector

Relevant for more developed countries and for storable export commodities

Warehouse Receipts Program Advisory Services (Ethiopia)

IFC

Contract Farming and Outgrower Schemes

Various projects in rubber and palm oil sector

DEG; private sector (rubber company; palm oil company)

Many private-sector driven schemes, e.g. Konzum in Croatia

Forward Contracting, Futures and Options

AgroAfrica Programme

DEG

Standard Chartered Bank

MSX Commodity Exchange in India

Commercial projects

Private sector

Larger companies world wide

Fig. 4. Examples of Applied Structured Finance products

 
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