Financing horticulture by leveraging the value chain – some structures

Lamon Rutten

CTA Revolutionising finance for agri-value chains

Nairobi, 14-18 July 2014

For details on transactions….

http://unctad.org/en/Docs/ditccom200613_en.pdf

Pre-shipment finance, Zimbabwe, pre-crisis

Post-shipment finance, Zimbabwe, crisis period

Latina Farms S.A., Panama – financing SPV for 3 fruit producing companies in Panama and Peru

•The producers farm their own (leased) land, and buy from contract growers; they produce and export principally pineapples, melons and mangoes.

•Pre-export finance on the back of extensive insurance cover that provided protection against production and transport risks.

•the facility was structured to provide the producers with the working capital that they needed at any time, with security coming both from the flow of goods to the buyers, and from the insurance package. T

•The buyers, large firms like Ffyfes and Dole, were asked to pay into a bank escrow account, and the performance of the producers in meeting the quality standards of the buyers was continuously monitored.

•Price risks were managed by the financier by the monitoring of the flow, and the continuing maintenance of over-collateralization margins.

•Crop insurance was used to manage production risks. It covered all perils based on a minimum yield per fruit type and an insured value per hectare and per box (in other words, it secured a minimum production value). Marine cargo insurance was used to cover all risks associated with the packing and transport of fresh produce from the producing companies’ packing plants to the buyers in the USA and Europe.

Forfaiting

Financing for sales on consignment, Côte d’Ivoire

With recourse invoice discounting, Zambia