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

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

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.

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.

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.