1. IFC Agribusiness Department Strategic Response to Rising Global Food Prices November 12, 2008

2. IFC and Agribusiness 3. IFC Investment in the Agribusiness Value Chain Exceeded US$1.3 Billion in FY 2008IFCs Goal: Deliver development impact along the global agri-supply chain, through investments and advisory services with the private sector, to create opportunities and improve peoples lives Financial Institutions MarketInfrastructure Farm Production Inputs Agri. Marketing Processing Marketing Distribution Risk Sharing Facilities Pre-Harvest Finance Trade Finance Fertilizers and other Chemicals Land Project/Corporate Finance Retail Infrastructure/Logistics CIT Access to Markets Note: The aggregated amounts listed next to categories above denote potential IFC investment size, subject to approvals 4. Agribusiness Committed Portfolio By Sector $2.2 Billion Committed Portfolio As Of June 30, 2008 By Region 5. Agribusiness Investment Approach

Corporate & Project Finance

Provide long term financing equity and loans that is not otherwise available

Create long term partnerships with emerging industry leaders

Promote IFCs brand through best practice for corporate governance, sustainability, Environment & Social standards, etc.

Implementfurther reach programs to support individual farmers, distribution companies, etc.

Provide Technical Assistance as added value in IFCs financing package

• • Technical Assistance (TA) and Advisory Services

Project specific for farmers, SME development, supply chain linkages, infrastructure

Market development of local supply to meet quality and quantity requirements

Corporate governance and business transparency advisory services

Wholesaling through Traders

and Financial Institutions (FIs)

Majority of farms/SMEs are too small for IFC reach but are essential to the sector

Field advantage of local intermediaries

(regulations, business customs, client/ supplier reputations)

Channel financial and technical assistance to end users via intermediary

Develop and promote sustainability best practices through the intermediary

Instruments: Long Term finance, partial credit guarantees, risk sharing, etc.

6. Strategic Response to Rising Food Prices 7. Agribusiness Action Plan for Rising Food Prices Main drivers of food price inflation Food prices have risen substantially over past year

Fundamentals

Supply and

Demand

Financial Markets Supply and Demand Source: FAO, April 2008

INCREASING DEMAND (food demand from emerging markets; diet changes; biofuel mandates)

LOWER SUPPLY (low stock to use ratio due to shortfalls in grain production; disappearance of reserve stocks; rising production costs fuel, fertilizer, seeds, chemicals; competition for land from biofuels)

DECLINING DOLLAR

SPECULATION AND INFLATION HEDGE

8. IFCs Multi-Channel Response

Indirect Investments

Wholesaling via Financial Intermediaries (Debt/Equity)

Portfolio risk sharing

T.A. for the FI and borrowers

Direct Investments

Investment in productive assets

Linkages: Supply Chain value

Capacity building for farmers

Land Funds

Partnering with World Bank

Improving Investment Climate (FIAS)

Legal / regulatory environment

TA projects in land titling reforms

FIAS/PEP-Africa warehouse receipts

Working Capital Facilities

Traders

Producers

Processors

9. IFC is Well Positioned to Provide Interventions in the Short Term

Strengthen Supply Chain Coordination and Increase Liquidity viaWorking Capital Facilities

• • Prevent disruption of prefinancing

• • Ensure continued provision of essential inputs (seeds, fertilizers, chemicals, fuels).

• • Processors and traders in good standing eligible

• • Wings (Indonesia), Ecom (Africa/Asia), Noble (Argentina)

Increase rural credit throughWholesaling Facilities with Financial Institutions

• • Reach a new class of smaller clients (farmers, MSMEs)

• • Channel technical assistance to financial institutions (agribusiness credit analysis) and clients (environment and social, linkages, etc)

• • Agrofinanzas (Mexico), TSB (Tajikistan), Aval Bank (Ukraine)

Short Term Response 10. IFC is Well Positioned to Provide Interventions that Address Long-Term Imbalances

Productive land strategy

• Bring land into sustainable production (CIS, Africa, Brazil)

• Introduce better agronomic practices

• Improve productivity (seeds, fertilizer, chemicals access)

• Regional focus on countries with upside potential:Argentina, Brazil, Russia, Ukraine

• Investment Funds (Atera, Bulgaria), Input distribution (Rise, Ukraine), Farming (Rise, Ukraine; BGK, Russia; Salala, Liberia; GOPDC, Ghana)

Vertically integrated Agri Supply Chain Infrastructure

• Strengthen and support the development of

• • Bulk ports and Terminals (Timbues, Aguirre)

• • Land, Rail and Sea Trasport (UABL, TransAmerica)

• • Logistics and Warehousing (Merec, Trio, Pronaca)

• • Modern retail (Rubliovskiy, ErroTech, Agrokor)

Water Efficiency and Irrigation Infrastructure (especially through PPPs and Municipalities)

Wholesaling Facilities with Financial Institutions, Processors and Tradersto increase rural credit to farmers and MSMEs.

Explorethe systematic development ofFinancial Instruments related to Agiculturethat deepen the markets and allow for efficient intermediation of financing and risk management in the sector (e.g. warehouse receipts, weather-index insurance)

FundamentalsOf Supply FinancialMarkets 11. Response to 2008 Global Food Prices Crisis:IFC Agribusiness Development Plan Short Term Response Medium Term Response Long Term Response

Immediate budget increase for most impacted industry departments and advisory services business lines

Provide liquidity throughout the value chain

• Trade finance

• Working capital

• Wholesaling finance

Supply side responses through global agricommodity players

Trade finance

Productive land

Improve supply chain infrastructure

Agribusiness development in Africa

Technical programs on the ground: productivity, access to finance

Standard setting

Improve logistics, product-to-market efficiencies

Reform agenda: regulatory / land / trade policy

Drive integration of small farmers to global agrisupply chain

Rural finance

IFC has already scaled up its activities and will continue to do so, to effectively provide financial and advisory services to its private sector clients and partners

Early results indicate that supply side, market driven responses to rising food prices will deliver results on the ground

12. Chris Richards Adviser IFC Agribusiness Department e:[email_address] p: 202-473-6230