fbpx 54253-001: Tavan Bogd COVID-19 Wheat Supply Chain Liquidity Support Project | Asian Development Bank

Mongolia: Tavan Bogd COVID-19 Wheat Supply Chain Liquidity Support Project

Nonsovereign (Private) Project | 54253-001 Status: Active

The transaction involves a loan of up to $15,000,000 or its equivalent in togrog, comprising (i) a loan of up to $10,000,000 or its equivalent in togrog to Ulaanbaatar Flour Limited Liability Company (UBF) and (ii) a loan of up to $5,000,000 or its equivalent in togrog to Tavan Bogd Foods Limited Liability Company (TBF) for the Wheat Supply Chain and Food Security Project in Mongolia.

The project will provide essential liquidity support to UBF and TBF so that they can sustain their operations during the coronavirus disease (COVID-19) crisis. The project will contribute to food security in Mongolia by ensuring a stable supply of wheat flour, the country's main staple, and flour products. The project will also preserve the livelihood of 4,000 wheat farmers and farm workers, 2,000 employees, and 2,000 sales agents.

Project Details

Project Officer
Jeong, Juhyun Private Sector Operations Department Request for information
Country
  • Mongolia
Sector
  • Agriculture, natural resources and rural development
 
Project Name Tavan Bogd COVID-19 Wheat Supply Chain Liquidity Support Project
Project Number 54253-001
Borrower/Company Tavan Bogd Foods LLC
Tavan Bogd LLC
Tavan Bogd Trade Limited Liability Company
Ulaanbaatar Flour LLC
Country Mongolia
Location Nation-wide
Type or Modality of Assistance
3981 Loan Ordinary capital resources USD 5.00 million Committed
3981 Loan Ordinary capital resources USD 10.00 million Committed
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 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 transaction involves a loan of up to $15,000,000 or its equivalent in togrog, comprising (i) a loan of up to $10,000,000 or its equivalent in togrog to Ulaanbaatar Flour Limited Liability Company (UBF) and (ii) a loan of up to $5,000,000 or its equivalent in togrog to Tavan Bogd Foods Limited Liability Company (TBF) for the Wheat Supply Chain and Food Security Project in Mongolia.

The project will provide essential liquidity support to UBF and TBF so that they can sustain their operations during the coronavirus disease (COVID-19) crisis. The project will contribute to food security in Mongolia by ensuring a stable supply of wheat flour, the country's main staple, and flour products. The project will also preserve the livelihood of 4,000 wheat farmers and farm workers, 2,000 employees, and 2,000 sales agents.

Objectives and Scope The project will help UBF and TBF sustain their operations during the COVID-19 crisis by providing financing for their working capital and operational costs. UBF will be able to increase the procurement of domestic wheat to build enough buffer inventory to cope with supply chain disruptions. As for TBF, the project will support higher inventory levels because of supply chain disruptions and operational costs.
Linkage to Country/Regional Strategy

The project is aligned with ADB's Strategy 2030, which calls for ADB to _scale up its financing for agribusiness_ and _promote

gender equality in at least 75% of the number of ADB's committed operations by 2030._ The project is also aligned with the Operational Plan for Private Sector Operations 2019 2024, which calls for working with strong Tier-3 companies _that are leaders in their country or in their niche._ The project is aligned with two strategic pillars of ADB's country partnership strategy, 2017 2020 for Mongolia: (i) promoting economic and social stability and (ii) developing infrastructure for economic diversification. The project is also aligned with the Independent Evaluation Department's validation of the country partnership strategy, which emphasizes promoting the diversification of the economy with a focus on improving the productivity of agribusinesses.

The project is consistent with Strategy 2030's operational priority 1 addressing remaining poverty and reducing inequalities by improving the standards of living of wheat farmers and workers during COVID-19; operational priority 2 accelerating progress in gender equality by protecting women workers and farmers; and operational priority 5 promoting rural development and food security which calls for (i) _modern, sustainable, and responsible corporate farming models;_ (ii) _integration of farmers, agribusinesses, and consumers into efficient and sustainable value chains;_ and (iii) the promotion of food security and an increase in agricultural productivity "to

provide sufficient, safe, and affordable food to the poor."26 The project is also part of ADB's Comprehensive Response to COVID-19 Pandemic , which proposed $20 billion to meet the needs of its developing member countries as they respond to the COVID-19 pandemic.

Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

ADB has categorized the project in compliance with ADBs Safeguard Policy Statement (2009) (SPS) as category C for environment.

ADB undertook due diligence and reviewed the potential environmental and social impacts of the project, and the measures to avoid, minimize, mitigate, and compensate for the adverse impacts in the safeguard reports and plans. It also carried out a corporate audit of the holding company (Tavan Bogd Trade LLC) and its two subsidiaries UBF and TBF (where proceeds are earmarked), through interviews with their management and site teams, a virtual site visit, and the review of corporate and operation-specific policies, procedures, and monitoring reports. The environmental and social measures, and the institutional capacity and commitment of all three

entities to manage the project's social and environmental impacts are deemed adequate.

Involuntary Resettlement ADB has categorized the project in compliance with ADB s Safeguard Policy Statement (2009) (SPS) as category C for involuntary resettlement. No land acquisition and involuntary resettlement issues are envisaged because no increase in the land footprint of the operations of UBF and TBF is linked to ADB financing.
Indigenous Peoples ADB has categorized the project in compliance with ADB s Safeguard Policy Statement (2009) (SPS) as category C for Indigenous Peoples. Project impacts on indigenous peoples are not envisaged.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 27 Jul 2020
Credit Committee Meeting 17 Sep 2020
Approval 29 Sep 2020
Last PDS Update 18 Feb 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.

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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

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Related Publications

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