The European Bank for Reconstruction and Development (EBRD) is providing US$30mn for the modernisation and expansion of a silo network to be managed by an affiliate of one of the world’s largest commodity groups.

The EBRD’s backing will help the Louis Dreyfus Commodities Group (LDC) upgrade and expand its silo infrastructure in the Stavropol, Rostov, Volgograd and Voronezh regions of southern and central Russia, which are among the main grain growing areas in Russia. The silos are owned by Russia Elevator Company (RusElCo), a company in which LDC acquired a majority stake in 2005.

RusElCo’s strategy is to offer international standards of reliable storage and handling services to the farmers, international and local traders and state entities making up its client base.

The bank’s financial participation will develop storage and handling infrastructure critical to realising Russia’s huge potential as a grain exporter.

The investment will also contribute to improving the interaction between suppliers of agricultural commodities, reducing price distortions, and expanding the market for other Russian agribusiness companies.

EBRD agribusiness director, Gilles Mettetal, says the bank was helping to transform outdated storage facilities into modern, competitive ones, which would offer world market standards of services. By supporting the operations of large foreign market leaders in the region the bank was also helping stimulate competition and promote greater efficiency, Mettetal adds.

LDCommodities chairman Robert Louis Dreyfus emphasises the company’s long-term commitment to the region. The company is building a solid network of strategically located assets and gives high importance to the quality of its local management, especially that of silo managers, for the development of its operations in the region.

The EBRD has so far committed around €4bn in more than 280 agribusiness projects across central and Eastern Europe and the Commonwealth of Independent States. In Russia, the bank has invested €1.3bn in around 76 agribusiness projects to date.