The project will help PT Cisarua Mountain Dairy (CMD) sustain its operations through the COVID-19 crisis by providing financing for working capital and operational expenditure. Due to global logistic disruptions, CMD needs to increase its inventory levels of imported materials to ensure adequate buffers for sustained operations. The US dollar appreciation versus Indonesian rupiah has been weighing on the cost of imported materials, further increasing liquidity needs for building up those inventories. In addition, CMD has started experiencing delayed payments from some of its customers, which have been more severely affected by the crisis. As a result, the cash conversion cycle of the company is expected to increase significantly and cannot be financed from the company's operating cash flow alone. The liquidity support will allow CMD to sustain business operations, enabling stable production and timely payments to farmers, suppliers, employees and sales agents.
| Project Name | Dairy Farmer Support and Food Security Project | |||||
| Project Number | 54216-001 | |||||
| Borrower/Company | PT Cisarua Mountain Dairy |
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| Country | Indonesia |
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| Location | Nation-wide | |||||
| Type or Modality of Assistance |
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| Strategic Agendas | Inclusive economic growth |
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| Drivers of Change | Private sector development |
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| Sector / Subsector | Agriculture, natural resources and rural development / Livestock |
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| 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 | Donges, Carine Sophie | |||||
| Project Sponsor(s) | ||||||
| Description | The project will help PT Cisarua Mountain Dairy (CMD) sustain its operations through the COVID-19 crisis by providing financing for working capital and operational expenditure. Due to global logistic disruptions, CMD needs to increase its inventory levels of imported materials to ensure adequate buffers for sustained operations. The US dollar appreciation versus Indonesian rupiah has been weighing on the cost of imported materials, further increasing liquidity needs for building up those inventories. In addition, CMD has started experiencing delayed payments from some of its customers, which have been more severely affected by the crisis. As a result, the cash conversion cycle of the company is expected to increase significantly and cannot be financed from the company's operating cash flow alone. The liquidity support will allow CMD to sustain business operations, enabling stable production and timely payments to farmers, suppliers, employees and sales agents. | |||||
| Objectives and Scope | The project will provide essential liquidity support to CMD to sustain its operations and thus the livelihoods of 2,142 employees, about 3,300 dairy farmers, and over 1,500 direct sales agents during the coronavirus disease (COVID-19) crisis. It will support rural livelihoods more generally, sustain gender inclusion, and contribute to food security with the production of affordable nutritious dairy products, mitigating the fallout from this unprecedented health, economic, and social crisis. | |||||
| Status of Operation/Construction | The project will not involve the expansion of the existing facilities or the development of new sites. | |||||
| Linkage to Country/Regional Strategy | The project is aligned with Strategy 2030, which calls for ADB to (i) scale up its financing for agribusinesses and (ii) promote gender equality in at least 75% of its committed operations by 2030 (operational priority 2). The project is also aligned with the Operational Plan for Private Sector Operations 2019 2024, which aims to expand the share of food brands in the portfolio because transactions in this downstream subsector have the highest return on capital, the lowest level of risks, and the potential to drive and structure upstream subsectors, and to impact a large number of farmers and consumers. Finally, the project is fully aligned with the objective of ADB's country partnership strategy, 2020 2024 for Indonesia to achieve higher, more inclusive, and environmentally sustainable growth. The project is aligned with ADB's $20 billion response package to the COVID-19 pandemic. As part of this emergency package, ADB's Private Sector Operations Department has been focusing on the provision of working capital and operational expenditure financing. These loans aim to support the continuity of operations of companies that are financially strong but face temporary liquidity issues in the COVID-19 context. The FAST project will complement the recently approved COVID-19 Active Response and Expenditure Support Program extended by ADB's sovereign assistance program in Indonesia under the Countercyclical Support Facility COVID-19 pandemic response option. The project is consistent with Strategy 2030's Operational Plan for Priority 1 (addressing remaining poverty and reducing inequalities) by improving the standards of living of dairy farmers and sales agents. It is also consistent with three of five elements of Priority 2 (accelerating progress in gender equality) by seeking to economically empower women, enhance gender equality in human development, and strengthen women's resilience to external shocks. Finally, the project is aligned with Priority 5 (promoting rural development and food security), which calls for (i) improving rural services, attracting private sector investments, and generating jobs in rural areas; (ii) improving farmer profitability; and (iii) enabling ADB's nonsovereign operations to provide direct support to agribusiness clients. |
| Safeguard Categories | |
|---|---|
| Environment | C |
| Involuntary Resettlement | C |
| Indigenous Peoples | C |
| Summary of Environmental and Social Aspects | |
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| Environmental Aspects | ADB has categorized the project in compliance with ADBs Safeguard Policy Statement (2009) (SPS) as category C for environment. The project will support working capital and operation expenditure, it is anticipated to have minimal environmental and social impact in addition to CMD's existing operation. ADB has undertaken due diligence. The environmental and social measures, the institutional capacity and commitment of CMD to manage the projects social and environmental impacts are deemed adequate. Based on gaps and improvement opportunities identified, CMD will implement corrective actions. An environmental and social monitoring report will be submitted to ADB on an annual basis. |
| Involuntary Resettlement | ADB has categorized the project in compliance with ADB's Safeguard Policy Statement (2009) (SPS) as category C for involuntary resettlement. The project will not involve the expansion of the existing facilities or the development of new sites. No land acquisition is required. |
| Indigenous Peoples | ADB has categorized the project in compliance with ADB's Safeguard Policy Statement (2009) (SPS) as category C for Indigenous Peoples. The project will not directly or indirectly affect Indigenous Peoples as the project will only support working capital and operation expenditure. |
| Stakeholder Communication, Participation, and Consultation | |
| Timetable for assistance design, processing and implementation | |
|---|---|
| Concept Clearance | 20 May 2020 |
| Credit Committee Meeting | 17 Jun 2020 |
| Approval | - |
| Last PDS Update | 09 Mar 2021 |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
| Title | Document Type | Document Date |
|---|---|---|
| Dairy Farmer Support and Food Security Project: FAST Report | Faster Approach to Small Nonsovereign Transactions | Jul 2020 |
| Dairy Farmer Support and Food Security Project: Initial Poverty and Social Analysis | Initial Poverty and Social Analysis | Jun 2020 |
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
None currently available.
Related Publications
None currently available.
The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
Requests for information may also be directed to the InfoUnit.
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Preserving food supplies and farm jobs during COVID-19
The COVID-19 pandemic has strained global food systems and processes, affecting both food supply and demand. ADB is helping build a resilient agribusiness sector through its work with the private sector.