A $15.6 million loan will help the company refinance short-term debt, releasing funds to expand facilities and provide credit to small producers
The Inter-American Development Bank approved a US$15.6 million loan to help Corporación Agrícola S.A. (Agricorp), Nicaragua's leading distributor of rice, wheat, beans, and other staple food products, to ensure reliable food supplies and expand opportunities for small-scale farmers.
The funding will allow the company to roll over its debt to achieve a more sustainable capital structure and build a bean processing and warehousing facility. It will also enable Agricorp to extend financing to small bean producers to help them purchase supplies and boost production, and provide them with training to increase productivity.
Although rice and beans are Nicaragua's leading agricultural products, producers have very low productivity rates and lack access to credit and to collective associative mechanisms that could boost their yields and their access to markets.
The IDB loan will allow Agricorp to revert this situation. By refinancing its short-term debt over a five-year period, the company will free up funds that it will use to implement an inclusive business model for small bean producers.
With a US$3.6 million contribution from the Opportunities for the Majority initiative, Agricorp will launch a program to build a processing and warehousing facility in Matagalpa and provide working capital to help small farmers finance their purchases of certified seeds, fertilizers, and other supplies to enhance quality and productivity.
Linking Agricorp more closely to the agricultural value chain will provide more transparency and stability to the bean market while improving opportunities for small producers, many of whom are grouped in the FrijolNica agricultural development program. These producers are expected to boost their sales volumes through safe purchase contracts and increased warehousing capacity.
The program also includes a training component that will help poorer farmers diversify their income and promote agricultural practices that improve the health and nutrition conditions of low-income sectors.
Opportunities for the Majority is an IDB initiative aimed at promoting market-based sustainable business models that foster participation by the private sector, local governments, and communities.
Up to US$5 million of the total lending is expected to be provided by Nicaraguan commercial banks or other financial institutions. The lending is for a five-year term, with different grace periods and interests rates for its different tranches.
