Bolstering food security in Vietnam

Last week, DFCD consortium partner FMO signed an intention to support two enterprises: Loc Troi Group (LTG), the leading integrated agribusiness in Vietnam, and the Maritime Commercial Joint Stock Bank (MSB), one of the leading banks in the country. The presentation of the letters of intent took place as part of the Dutch trade mission to Vietnam, in the presence of Vietnamese Prime Minister Pham Minh Chinh and Dutch Prime Minister Mark Rutte. 

Loc Troi

Loc Troi Group (LTG) is Vietnam’s leading integrated agribusiness, active in rice, crop protection chemicals, and certified seeds.

LTG will pre-finance contract farmers providing them with technical support, agronomical advice, quality inputs (seeds, pesticides, fertilizers), and a substantial guaranteed payment plus yield bonus. LTG thus takes over significant risks from smallholder farmers, thereby increasing resilience. Furthermore, LTG is a leading organization working on reducing methane emissions together with SNV, albeit we are still exploring what role DFCD/FMO will play here.

Finally, the world is facing a serious global rice crisis, with prices being at a 15-year high. This is largely due to adverse weather events and declining rice cultivation areas due to climate change (due to droughts and increased salinization). Timing of this (large) mobilized deal, is thus important for global food security.

MSB

DFCD will participate with a 9 year tenor loan for an amount of USD 30M, focusing on climate resilient projects, according to the eligible DFCD criteria. At MSB’s discretion a TA project with SNV can be possible.

FMO-A will also participate for the shorter tenor tranche. This part will be used for productive SME loans, part of this contributing to Reducing Inequalities or Green projects. FMO will try to mobilize an amount from the Financial Investment Management funds so we can come to an amount (close to) USD 70M, so USD 100M in total including DFCD.