Dutch development bank FMO has provided a US$10mn medium-term facility to agricultural input firm Agrofértil in Paraguay.

The loan will help Agrofértil provide pre-harvest financing to farmers in the country. The company’s administrative director, Adilson Antonio Junior, explains to GTR that 80% of its crop input sales are financed for payment upon harvest, and that the loan will mostly benefit small and medium-sized agricultural operations.

The transaction has a sustainability angle as it includes support from FMO to help Agrofértil develop a verification system to ensure that they do not commercialise any crops from farms that have been involved in recent significant conversion of natural habitats. The system will be applied to the company’s new clients, or existing clients that are expanding their operations.

“This is not our first loan with a sustainable scope; our first financing in this area was in 2005 when we initiated our relationship with the Inter-American Investment Corporation [IIC, part of the Inter-American Development Bank], which prompted internal changes within Agrofértil to become a more sustainable company concerned with socio-environmental issues. After that, we worked to get financing from the International Finance Corporation in 2011 and now from the FMO. Currently we have active lines with these three multilaterals,” says Antonio.

This loan fits within FMO’s efforts to support sustainable finance in Paraguay. The organisation has also initiated a roundtable for sustainable finance in the country to provide guidance to financial institutions on the country’s complex environmental and social dilemmas and ensure a level playing field regarding the implementation of minimum environmental and social risk management standards.

Suzanne Gaboury, director of agribusiness at FMO, says: “FMO is proud to play a part in increasing the ability of Agrofértil to support farmers as well as supporting the dissemination of agricultural best practices and inputs to farmers and a sustainable operation in Paraguay.”

Agrofértil was founded in 1993 and sells to more than 1,800 farmers in Paraguay. It is the sixth-largest producer and fourth-largest exporter of soybeans worldwide, which contributes to some 23% of Paraguay’s GDP.