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IFC has become one of 12 shareholders of the Latin American Agribusiness Corporation (LAAD) to support its long-term financing for small and medium agribusiness companies across Latin America by acquiring shares in LAAD from US company Hexion Specialty Chemicals, IFC said in a press release.
IFC's investment in LAAD, a financial intermediary that specializes in lending to SMEs in the agribusiness sector, will allow smaller farmers to have access to long-term financing, which is currently scarce in the region, especially for agriculture and agribusiness SMEs, the release reads.
LAAD provides loans of less than US$3mn to small and medium-sized farmers to help modernize and expand their operations.
IFC said commercial lenders perceive the sector to be risky, especially in current market conditions of tight liquidity and volatility of agricultural commodity prices.
This is IFC's third investment in LAAD. In 2002 and 2006 it provided the company with US$20mn and US$30mn in loans, respectively.
IFC is the private sector arm of the World Bank Group. LAAD operates in 15 Latin American countries and supports farmers who produce a variety of products, ranging from soybean and grains to livestock, fruits, vegetables, flowers and ornamental plants for exports.