Bangladesh : PRAN Agribusiness Project

Project Name

PRAN Agribusiness Project

Project Number

46904-014

Borrower / Company

• Sylvan Agriculture Limited

Country / Economy

• Bangladesh

Location

Type or Modality of Assistance

Approval Number	Facility	Fund Source	Amount	Status
2883	Loan	Ordinary capital resources	USD 25.10 million	Closed

Strategic Agendas

• Inclusive economic growth

Drivers of Change

• Private sector development

Sector / Subsector

• Agriculture, natural resources and rural development / Agro-industry, marketing, and trade

Gender

Project Sponsor(s)

Description

PRAN Agribusiness Project

ADB will support the development of new agribusiness production facilities by PRAN, the largest food and agribusiness group in Bangladesh. As part of its vertical integration and import substitution strategy, PRAN will invest in a liquid glucose plant and a flour mill. The project also includes a frozen food processing plant. Frozen food produced will be mainly flat breads made from flour. Maize and wheat will be procured from local farmers to produce liquid glucose and flour. ADB will provide a $25.1 million loan to the new project company, which will be guaranteed by several existing group companies.

This is ADB's first non-sovereign agribusiness project since 1985. It reflects PSOD's strategy of being more active in sectors with high development impact potential, particularly in Asian Development Fund countries such as Bangladesh

Objectives and Scope

The project will help sustain high agricultural growth by connecting farmers to local and global food markets. The project will help strengthen national food security by improving nutrition with affordable, high-quality food products. PRAN will be one of the first groups in Bangladesh to produce flour fortified with vitamins and minerals. The project will create significant employment opportunities for the poor. The project company will hire about 1,000 workers, at least 30% of which will be women. In addition, some 50,000 farmers will benefit from guaranteed purchase from the project. PRAN has been leading the development of contract farming in Bangladesh, with 42,000 farmers already under contract with the group.

Status of Development Objectives

The Project has been contributing to its development objectives since it started commercial operations in September 2014.

Status of Operation/Construction

ADB had approved a loan of up to US$25.1 million for SAL to construct 3 agribusiness facilities (aside from the liquid glucose plant, SAL was also planning to construct a flour mill and a frozen food processing plant). However SAL decided to only pursue the liquid glucose plant and the loan facility was downsized to US$12.15 million. The plant started commercial operations in September 2014. The loan was fully paid in January 2020.

Linkage to Country/Regional Strategy

The project aligns with ADB's agriculture sector strategy. In particular, the Operational Plan for Sustainable Food Security in Asia and the Pacific recommends an 'expanded partnership with the private sector to attract 'more direct investments in productivity enhancement, agro-processing, agro-retailing, and other nonfarm rural business. Assistance to an integrated food and agribusiness company also addresses the operational plan's objective of 'increasing synergy and value addition in the backward and forward linkages along the food and agriculture value chain. Improved linkages along the value chain enhance productivity, employment opportunities, exports, and regional trade, as well as food security for the poor.

Agriculture and natural resources is one of the six sectors identified for ADB assistance under its country partnership strategy for Bangladesh, 2011-2015. In particular, the strategy document mentions that ADB's private sector operations will consider financial support for the food processing industry. The project will benefit from synergies with ADB's sovereign assistance to rural infrastructure and water resource management.

Safeguard Categories

Environment

B

Involuntary Resettlement

C

Indigenous Peoples

C

Summary of Environmental and Social Aspects

Environmental Aspects

In compliance with ADBs Safeguard Policy Statement (2009), the project is category B for environment, category C for involuntary resettlement, and category C for indigenous peoples. The potential environmental, health, and safety impacts and risks of the project have been identified in the Initial Environmental Examination (IEE), and effective corrective measures to avoid, minimize, or mitigate them are incorporated in the Environmental Management Plan. The institutional capacity and commitment of SAL to manage the projects social and environmental impacts are deemed adequate.

Involuntary Resettlement

The project will not entail physical or economic displacement, as the land where the manufacturing plant is located is owned by SAL within Habiganj Industrial Park.

Indigenous Peoples

The project will not affect any indigenous peoples.

Stakeholder Communication, Participation, and Consultation

Consultations were carried out as part of the IEE study with relevant project stakeholders and this will be continuously undertaken, especially with the local farmers in surrounding communities who will be providing raw materials for the plants. There will be awareness building activities concerning public health and food safety issues with an end goal of improved agricultural practices contributing to improvement in income.

Contact

Responsible ADB Officer

Patil, Avesh

Responsible ADB Division

Portfolio Management Division, PSOD

Responsible ADB Department

Private Sector Operations Department

Timetable for assistance design, processing, and implementation

Concept Clearance

16 Jan 2012

Credit Committee Meeting

21 Jun 2012

Approval

08 Aug 2012

PDS Creation Date

11 Jul 2012

Last PDS Update

11 Aug 2020