Cambodia : De Heus Sustainable and Inclusive Feed Supply Chain Project

Nonsovereign Project | 55292-001

Senior unsecured amortizing US dollar (USD) loan to De Heus TMH Company Limited (DH-TMH) of up to $15 million to support (i) the expansion of storage and processing capacity for animal feed and (ii) permanent working capital needs (raw material inventory from and advances for local corn, rice, and cassava farmers and receivables on poultry, fish, and other livestock farmers) and a partial guarantee of up to $5,250,000 covering principal from the Asian Development Fund (ADF) Private Sector Window (PSW), to De Heus TMH Company Limited (DH-TMH) for the De Heus Sustainable and Inclusive Feed Supply Chain Project in Cambodia.

Flickr photos from the 55292-001: Cambodia: De Heus Sustainable and Inclusive Feed Supply Chain Project album.

Project Details

  • Project Officer
    Nath, Kiron
    Private Sector Operations Department
    Request for information
  • Approval Date
    21 April 2022
  • Country/Economy
    Cambodia
Project Name
De Heus Sustainable and Inclusive Feed Supply Chain Project
Project Number
55292-001
Borrower / Company
  • De Heus Animal Nutrition B.V.
  • De Heus TMH Company Limited
Country / Economy
  • Cambodia
Location
Nation-wide
Type or Modality of Assistance
Approval Number Facility Fund Source Amount Status
4180 Guarantee Asian Development Fund USD 5.25 million Committed
4180 Loan Ordinary capital resources USD 15.00 million Committed
Operational Priorities
  • OP1: Addressing remaining poverty and reducing inequalities
  • OP2: Accelerating progress in gender equality
  • OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
  • OP5: Promoting rural development and food security
Sector / Subsector
  • Agriculture, natural resources and rural development /

Gender
Effective gender mainstreaming
Project Sponsor(s)
    Description
    Senior unsecured amortizing US dollar (USD) loan to De Heus TMH Company Limited (DH-TMH) of up to $15 million to support (i) the expansion of storage and processing capacity for animal feed and (ii) permanent working capital needs (raw material inventory from and advances for local corn, rice, and cassava farmers and receivables on poultry, fish, and other livestock farmers) and a partial guarantee of up to $5,250,000 covering principal from the Asian Development Fund (ADF) Private Sector Window (PSW), to De Heus TMH Company Limited (DH-TMH) for the De Heus Sustainable and Inclusive Feed Supply Chain Project in Cambodia.
    Objectives and Scope

    The project will support DH-TMH to expand the storage and processing capacity of its animal feed factory in Kampong Speu province, which supplies feed to poultry, pig, and fish farmers in Cambodia. It will support high-quality, affordable, and sustainable animal feed production and improve the climate resilience of the company's operations. The project will contribute to the development of Cambodia's nascent feed sector, which is highly dependent on imports. The project is fully aligned with the Government of Cambodia's goals to develop its domestic animal feed sector and ensure sufficient domestic production of meat from livestock and aquaculture. The project will benefit the livelihoods of smallholder poultry farmers and maize farmers in DH-TMH's supply chain, and the 116 employees of DH-TMH. The associated TA will provide capacity building support to 2,000 maize farmers and 2,000 poultry farmers to support a prompt and climate-resilient recovery from the COVID-19 pandemic.

    The ADB PSW unfunded risk transfer will support bankability by enabling significant de-risking of the project.

    Linkage to Country/Regional Strategy

    The project is consistent with ADB's Strategy 2030's operational priority (OP) 1 (addressing remaining poverty and reducing inequalities) by improving the livelihoods of smallholder poultry and maize farmers; OP2 (accelerating progress in gender equality) through gender interventions targeted at women workers and farmers; OP3 (tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability) by promoting the climate resilience of DH-TMH's operations and of maize and poultry farmers; and OP5 (promoting rural development and food security), through the integration of farmers, agribusinesses, and consumers into efficient and sustainable value chains. The project is consistent with ADB's country partnership strategy, 2019 to 2023 for Cambodia, which calls for improvement of the productivity and commercialization of agriculture through the strengthening of value chains.

    The project is aligned with the Operational Plan for Private Sector Operations, 2019 to 2024, which calls for working with tier 1 agribusiness companies, expanding the agricultural inputs subsector, and working in low income countries. The project will complement ADB's sovereign assistance program in Cambodia, which aims to strengthen agricultural value chain linkages and safety, and promote private sector-driven agricultural value chain development.

    Private Sector Window

    The agribusiness sector is critical to Cambodia's economy and employs large numbers of people. However, the value-added share of agriculture in Cambodia's GDP has steadily declined over the past 20 years and the country remains a net importer of agricultural commodities. Agricultural inputs in Cambodia are often more expensive and of lower quality than those from its neighbors. ADB structured concessional financing in this transaction to help mitigate the credit risk of the borrower's local Cambodian minority shareholder to enable ADB's lending from its ordinary capital resources. The project aims to (i) support the Cambodian livestock and aquaculture sector by decreasing its reliance on expensive, imported animal feed, (ii) increase feed conversion ratios and yield for local livestock and fish farmers, (iii) support food and nutrition security through increased quality of fish and livestock that contributes to a stable protein supply, (iv) support local smallholder corn farmers, who are the main suppliers for animal feed producers, (v) provide advances and adequate payment terms to livestock and fish farmers, and (vi) support the diversification and value-addition of the agribusiness sector to enable a sustainable, resilient economic growth path.

    ADB estimated the nominal grant element of PSW support to be 6% of the project cost of $23,700,000. This estimate is based on the difference between (i) a 'reference price (either a market price if available; the price calculated using ADB's pricing model, which comprises three main elements: risk, cost, and profit; or a negotiated price) and (ii) the 'concessional price being charged by PSW.

    ADB sized the PSW grant (loan guarantee solution) to mitigate the credit risk of the borrower's local Cambodian shareholder by providing a first loss guarantee to its exposure under ADB's loan.

    Safeguard Categories

    Environment
    B
    Involuntary Resettlement
    C
    Indigenous Peoples
    C

    Summary of Environmental and Social Aspects

    Environmental Aspects
    ADB has categorized the investment in compliance with ADBs Safeguard Policy Statement (2009) as category B for environment. The planned expansion to accommodate additional machinery and storage will take place within the footprint of the existing facility and is anticipated to have limited and temporary environmental impacts.
    Involuntary Resettlement
    ADB has categorized the investment in compliance with ADBs Safeguard Policy Statement (2009) as category C for involuntary resettlement. The proposed activities will not require additional land for the expansion of storage and processing capacity of the feed mill and will not result in physical or economic displacement. The audit confirmed that there are no legacy issues associated with the leased land where the facility is located.
    Indigenous Peoples
    ADB has categorized the investment in compliance with ADBs Safeguard Policy Statement (2009) as category C for indigenous peoples. There are no expected adverse impacts to distinct and vulnerable indigenous peoples. The nearest indigenous peoples community is located about three kilometers from the facility.
    Stakeholder Communication, Participation, and Consultation

    Contact

    Responsible ADB Officer
    Nath, Kiron
    Responsible ADB Division
    Office of the Director General, PSOD
    Responsible ADB Department
    Private Sector Operations Department

    Timetable for assistance design, processing, and implementation

    Concept Clearance
    -
    Credit Committee Meeting
    -
    Approval
    21 Apr 2022
    Last PDS Update
    07 Mar 2024

    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
    De Heus Sustainable and Inclusive Feed Supply Chain Project: Report and Recommendation of the President Reports and Recommendations of the President Mar 2022
    De Heus Sustainable and Inclusive Feed Supply Chain Project: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Feb 2022

    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.

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