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IFC supports local agriculture company

Released at: 16:09, 28/06/2019

IFC supports local agriculture company

Photo: IFC

Support for Nafoods Group to improve productivity and output, create jobs, and improve farmer incomes.

by Doanh Doanh

The International Finance Corporation (IFC), a member of the World Bank Group, signed an agreement on June 28 to support the Nafoods Group JSC, a local agri-business company, to expand its existing fruit processing capacity, boost its exports, and further develop its new fruit seedling business with a financing and advisory package.

This will subsequently improve the company’s productivity and output, thereby creating jobs and improving income opportunities for farmers in its supply chain.

“The IFC’s long-term funding and technical advice could not be more timely, as we are trying to develop higher value for our products by adopting safe and sustainable practices and by improving our production facilities,” said Mr. Nguyen Manh Hung, Nafoods Group Chairman. “We believe enhanced production capacity will allow us to generate better income opportunities for local farmers and meet the demands of high-value markets.”

Listed on the Ho Chi Minh stock exchange, Nafoods Group is a small, niche fruit processor and exporter in Vietnam, with a leading position in passionfruit. The company sources more than 13,300 tons of fresh and processed fruits annually from various regions in Vietnam including the central highlands, northwest mountains, and north-central coastal regions, which are among the country’s poorest regions.

The IFC investment will allow Nafoods Group to increase the number of farmers along its supply chain by 11,500. Approximately 150 full-time jobs will also be created in its factories. Along with financing, the IFC will advise Nafoods Group on implementing a food safety management system for its cold chain system in line with the globally-recognized Food Safety System Certification 22000. This will help ensure quality and minimize wastage.

The IFC’s $8 million quasi equity investment in the form of redeemable preference shares, which can be converted into ordinary shares, will fund the expansion of Nafoods Group’s processing factory in the Mekong Delta’s Long An province and the construction of a packaging house in the central highlands. The financing will also help the company grow its new business in fruit seedlings, ensuring higher productivity and quality.

In partnership with New Zealand and the Slovak Republic, over the next 18 months the IFC will also work with the company’s fruit farmers and suppliers in Vietnam, Cambodia, and Laos, to help them conform to global sustainable farming standards and practices. International certifications such as Good Agricultural Practices (GLOBALG.A.P), Rainforest Alliance, and Fair Trade will help Nafoods Group farmers grow high-quality and sustainable fruit, expanding its access to new export markets. In Vietnam, the project will be implemented as a pilot for about 1,000 farmers on 3,000 ha of land for producing passionfruit, dragonfruit, and coconut. The project will subsequently be scaled up.

“As Vietnam seeks to increase its economic competitiveness and access to international markets, developing a high value-added and export-oriented agribusiness sector will help unlock the industry’s full potential,” said Mr. Kyle Kelhofer, IFC Country Manager for Vietnam, Cambodia, and Laos. “Efforts made by agri-businesses like Nafoods Group will further contribute to the transformation of Vietnam’s agriculture sector, creating better jobs and improving rural incomes and livelihoods.”

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