fbpx 51139-001: Agricultural Value Chain Development Project | Asian Development Bank

Regional: Agricultural Value Chain Development Project

Nonsovereign (Private) Project | 51139-001 Status: Approved

The project will support Olam's investment plan in Viet Nam, Indonesia, PNG, and Timor-Leste during 2017-2019 by financing midstream coffee and sugar processing expansions and permanent working capital investments for smallholder farmer supply which will promote efficient, inclusive, and sustainable agricultural value chains across a variety of products including coffee, sugar, cashew, cocoa, and pepper.

 
Project Name Agricultural Value Chain Development Project
Project Number 51139-001
Borrower/Company Caf Outspan Vietnam Limited
Mitr Phol Sugar Corporation Limited (Mitr Phol)
Olam International Limited
PT Dharmapala Usaha Sukses
Country Regional
Location Regional
Type or Modality of Assistance
Loan Japan USD 75.00 million Committed
3586 Loan Ordinary capital resources USD 65.00 million Approved
3587 Loan Ordinary capital resources USD 5.00 million Approved
3588 Loan Ordinary capital resources USD 30.00 million Approved
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Partnerships
Private sector development
Sector / Subsector

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

Gender Equity and Mainstreaming Effective gender mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Office of the Director General, PSOD
Responsible ADB Officer Jeong, Juhyun
Project Sponsor(s)
Description

The project will support Olam's investment plan in Viet Nam, Indonesia, PNG, and Timor-Leste during 2017-2019 by financing midstream coffee and sugar processing expansions and permanent working capital investments for smallholder farmer supply which will promote efficient, inclusive, and sustainable agricultural value chains across a variety of products including coffee, sugar, cashew, cocoa, and pepper.

The project will help Olam develop primary and secondary processing plants in origin markets closer to smallholder farmers and in destination markets closer to the customer, adding more value in local markets and rendering more efficient and integrated agricultural value chains. In Viet Nam, Cafe Outspan Vietnam Limited (COVL), a subsidiary of Olam, will increase capacity of its soluble coffee plant. In Indonesia, PT Dharmapala Usaha Sukses (PT DUS), also a subsidiary of Olam, will increase capacity of its sugar refinery. In PNG, Olam plans to expand its coffee operations by expanding primary processing facilities in the Morobe and Eastern Highlands provinces and adding storage capacity. In Timor-Leste, Olam's planned investment will help upgrade the coffee primary processing and storage assets that Olam acquired from Timorcorp in 2015.

The project includes permanent working capital investments for smallholder farmer supply in Viet Nam, Indonesia, PNG, and Timor-Leste which includes inventory of raw agricultural products procured from farmers and advances to farmers, which will allow Olam to increase its sourcing volumes from smallholder farmers. The project will augment the direct benefits to smallholder farmers by leveraging existing Olam sustainability programs that provide agricultural extension services, training, and livelihood support to smallholder farmers.

Objectives and Scope The project will contribute to at least three targets of the Sustainable Development Goals: (i) double the agricultural productivity and incomes of small-scale food producers through inputs, knowledge, markets, and opportunities for value addition and nonfarm employment ; (ii) ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, help maintain ecosystems, and strengthen capacity for adaptation to climate change ; and (iii) increase significantly the exports of developing countries .
Linkage to Country/Regional Strategy

The project is aligned with the ADB Midterm Review of Strategy 2020, which emphasizes the need to invest in agriculture to increase productivity, strengthen links with local value chains, promote food safety and quality standards, and improve the resilience of the sector to the impact of climate change. It is consistent with ADB's country partnership strategies for Viet Nam, Indonesia, Timor-Leste, and PNG and will complement ADB's sovereign assistance programs in these four targeted DMCs.

As a regional project benefiting four DMCs as well as non-DMC regional members, the project is aligned with ADB's operational plan for regional cooperation and integration, which highlights the importance of raising competitiveness in connected markets including through promoting and facilitating the participation in global and regional value chains by small and medium-sized enterprises and smallholder farmers.

The project is aligned with ADB's operational plan for agriculture and natural resources, 2015 to 2020, which recommends greater private sector agribusiness investment by ADB through working with strong agribusiness sponsors adopting best practices.

Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Key environmental impacts from PT DUS and COVL operations include generation of fugitive emissions from coal storage, air emissions and noise from boiler operations at sensitive receptors, odor, health risks from poor ventilation and inadequate occupational management procedures, and fire safety risks. PT DUS has undertaken corrective actions to improve its operations and is committed to implementing additional corrective actions from the environmental audit conducted to meet SPS requirements. COVL also aims to improve its process operation. COVL and PT DUS updated their environmental assessment reports to meet SPS requirements on the initial environmental examination. Expansion of Timor-Leste and PNG facilities will be on hard surfaces and storage areas, and anticipated to have minimal environmental impact.
Involuntary Resettlement The expansion facilities will be constructed within existing premises of Olam's subsidiary companies. These lands do not have any legacy or current risks associated with land acquisition or resettlement. No involuntary resettlement issues are envisaged for the project.
Indigenous Peoples No indigenous peoples issues are envisaged for the project.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 10 Apr 2017
Credit Committee Meeting 18 Sep 2017
Approval 27 Oct 2017
Last PDS Update 12 Jun 2019

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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