IFDC’s Credit Enhancement Fund (CEF) for agribusiness development was established as a result of an agreement between the government of the United States, represented by the Commodity Credit Corporation (CCC), and IFDC for the supply of agricultural commodities under the Food for Progress (FFP) Act.
On the basis of that agreement, the U.S. Department of Agriculture (USDA) awarded IFDC a commodity grant of 10,000 metric tons (mt) of corn and 6,000 mt of soybeans for distribution in Albania in July 2003. IFDC completed the distribution and monetization of commodities in May 2004 and the proceeds were assigned to support agribusiness development activities in Albania. More than $4 million was generated by the program, exceeding the anticipated proceeds by $1.3 million.
Thirty percent of the net proceeds from the monetization of commodities was allocated to support technical and business assistance activities. The activities were conducted by Land O’Lakes and the Association and Business Management Center, in consultation with IFDC. Activities centered on the animal feed milling, dairy, poultry, swine and egg sectors. The remaining 70 percent was allocated to the establishment of a CEF (a loan guarantee fund for agribusiness development) at the American Bank of Albania.
An assessment of businesses financed by loans guaranteed by the CEF indicated that most businesses were experiencing significantly increased productivity and revenues, in large part due to the technical and managerial assistance provided in conjunction with the loans. IFDC’s Credit Enhancement Fund (CEF) for agribusiness development was established as a result of an agreement between the government of the United States, represented by the Commodity Credit Corporation (CCC), and IFDC for the supply of agricultural commodities under the Food for Progress (FFP) Act.
On the basis of that agreement, the U.S. Department of Agriculture (USDA) awarded IFDC a commodity grant of 10,000 metric tons (mt) of corn and 6,000 mt of soybeans for distribution in Albania in July 2003. IFDC completed the distribution and monetization of commodities in May 2004 and the proceeds were assigned to support agribusiness development activities in Albania. More than $4 million was generated by the program, exceeding the anticipated proceeds by $1.3 million.
Thirty percent of the net proceeds from the monetization of commodities was allocated to support technical and business assistance activities. The activities were conducted by Land O’Lakes and the Association and Business Management Center (ABMC), in consultation with IFDC. Activities centered on the animal feed milling, dairy, poultry, swine and egg sectors. The remaining 70 percent was allocated to the establishment of a CEF at the American Bank of Albania.
An assessment of businesses financed by loans guaranteed by the CEF indicated that most businesses were experiencing significantly increased productivity and revenue, in large part due to the technical and managerial assistance provided in conjunction with the loans.
IFDC continued to provide management assistance to ABMC through the ABMC small grants program. The ceiling amount for grants was US $25,000. The grants were targeted for agribusiness development, technology introduction, human capacity building and trade improvement. A total of 14 grants were approved, with a value ranging from US $14,820 to $25,000. The aggregate total of the grants was $315,340.
ABMC cooperated with the USAID-funded Albania Agriculture Competitiveness (AAC) project, mainly through the grants program. Here are three examples of agribusiness grant recipients:
- Sejega has value-added processing facilities and started a mushroom production facility near Tirana with its ABMC grant. The mushroom enterprise converted tunnels (which were used by the military during Communist rule) into production sites for mushrooms. The mushrooms are being marketed in Albania, reducing mushroom imports.
- ELITE AE is expanding its greenhouse operations to improve competitiveness in fresh herbs for export. The expanded greenhouse operation is allowing for a production and packaging facility near the Rinas airport.
- Agro-Koni is fully integrated from agro-input supply to post-harvest processing and domestic marketing. The firm provides 1,000-1,500 farmers with planting materials and other inputs needed for a quality harvest. Agro-Koni provides advisory services to farmers and collects/procures the farmers’ harvest. Temporary storage, grading and packaging are done as needed for the domestic marketing of fresh produce. The ABMC grant was used to expand and upgrade the firm’s cold processing facility.
Albania has made remarkable progress over the past 20 years. Now there is an increasingly self-sufficient agricultural sector – domestic crop production is thriving and export crops are also doing very well. Private sector agribusiness is functioning and prospering. As a component of IFDC’s exit strategy, the remaining balance of the Albania Credit Enhancement Fund remains with the cooperating bank in Albania and will continue to be made available to Albanian agribusinesses.
IFDC also prepared a business plan as part of its exit plan. ABMC is implementing this business plan and is guardedly optimistic that it will be able to generate adequate revenue for its operations. Particular attention is being given to increasing revenue from dues and providing improved services and also developing stronger linkages with the Albania agribusiness and donor community.
After a 20-year presence in the country, IFDC’s final project in Albania ended on December 31, 2011.
[Updated May 11, 2012]
CEF Information
New Product Generates Profits for Albanian Entrepreneur (Taken from IFDC Report Volume 37, No. 1)