Agri-finance support mechanism

Asian Development Bank

Mark BezemerSenior Country Economist

Instruments• Agriculture Commodities Derivatives Market• Agriculture Insurance

Agriculture Commodities Derivatives Market

• Promotion of private entrants• Abolishing distortionary price settings• Infrastructure and supervision• Warehousing and standardization• Settlement mechanism• Awareness raising campaign

Agriculture Insurance • Weather index insurance • Catastrophe (re)insurance• Catastrophe bond

Policy Options• Risk sharing mechanism for subsidized

lending• Locally reinvestment mechanism• Setting floor for FIs on agriculture business

financing (wholesale to MFIs)• Preferential tax rates for agribusinesses• Introduction of incentive mechanism for

increased productivity• Preferential requirements for establishment

of non-deposit-taking-FIs in the rural areas

ADB support for Agri-business Description ARDP-1

(2009-2015) ARDP-2 Proposed

Funding ADB Grant: $14.7 mlnGOM: $1.4 mln

ADB Loan: $50.0 mlnGOM: $1.0 mln

Project objective

Foster sustainable agriculture and rural development through developing of value chains

Project components

1. Rural infrastructure development

2. Value chain investments (VCI)

3. Marketing and brand development

1. Rural infrastructure development

2. Value chain investments (VCI)3. Enterprices’ marketing and

technical capacity improvement4. Marketing and brand

development5. Credit guarantee support

Corporate level of Value chain support

1. Sectoral level of value chain support;

2. Cluster development

VCI loan conditions

1. ADB - 50%, banks – 50%2. Total loan fund: $ 22.3

mln;3. 7 years (3 years grace

period)

1. ADB – 100%2. Total loan fund: $ 41.0 mln;3. 7 years (3 years grace)