IFC’s investment helps strengthen agricultural sector while boosting sustainability
Chilean press revealed in mid-August that IFC, a member of the World Bank Group, is investing USD 50 million in Sugal Chile Limitada, a Chilean subsidiary of the Sugal Group, one of the world's largest producer and exporter of tomato paste; the investment is intended to support farmers, while also reducing greenhouse-gas emissions and boosting energy and water efficiency in Chile. The aim of the IFC investment is to create market competitiveness and contribute to the country's climate goals.
IFC's loan will help Sugal Chile expand its operations, which include starting a new tomato paste production line in Talca, maintaining the Tilcoco Plant, adopting energy efficiency measures by replacing a coal boiler by a more efficient one operated with liquefied petroleum gas, and boosting productivity through process reengineering. The funding will also allow the company to reach more farmers, helping them prepare land, procure fertilizers and seeds, and install drip irrigation systems.
The financing package comprises an "A" loan of up to USD 25 million and up to USD 25 million from IFC's Managed Co-Lending Portfolio Program, an innovative syndications platform that allows institutional partners to participate in IFC's loan portfolio. The project is under IFC's Global Food Security Platform, which aims to support the sustainable production of essential staples—for example, processed tomatoes—in developing countries, especially with soaring food prices.
Miguel Baptista, Global CFO of Sugal Group, said, "We are thrilled to partner with IFC to improve our operations in Chile in order to achieve more sustainable and climate alignment processes. Sugal supports behaviors that contribute to a smaller environmental footprint by reducing consumption, conserving resources and managing waste properly".
IFC will also share international best practices with the company to help improve its environmental and social standards. The investment contributes to climate mitigation (33%) by adopting energy efficiency initiatives (including replacing coal boilers) and climate adaptation by financing drip irrigation systems and drought-resistant seeds. The greenhouse-gas emissions (GHG) savings are estimated at 6,400 tons of carbon dioxide equivalent ("tCO2eq") per year.
"Companies like Sugal can play a crucial role in deploying new methods and technologies that can reduce the climate footprint of the agricultural sector," said Manuel Reyes-Retana, IFC's regional director for Latin America and the Caribbean. "We are committed to helping the agricultural companies become more sustainable," he added.
IFC has made agribusiness a priority because of its potential for broad development impact and especially strong role in poverty reduction. IFC combines investments and advisory services to help the sector address higher demand and escalating food prices in an environmentally sustainable and socially inclusive way. In FY22, IFC's long-term commitments in agribusiness and forestry totaled about USD 1.1 billion, including USD 408 million mobilized from other investors.
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About Sugal
Sugal Chile is the Chilean subsidiary of Sugal Group, founded in 1957 in Azambuja, Portugal. Sugal Group is a tomato paste producer with facilities in Chile, Portugal, and Spain. With a presence in both the Northern and Southern Hemispheres, it can process tomatoes throughout the year. Sugal Chile accounts for 45 percent of the Group's tomato paste sales, and the operations in Chile have become the Group's main growth driver. Sugal Group participates in the entire value chain, from the selection of seeds and farming to processing and marketing. The Group sources 20 percent of its tomatoes from approximately 2,800 hectares of leased farms, while the remaining 80 percent is sourced from long-term partnerships with farmers. The Group provides advances to farmers to support investments in land preparation, seedlings grown with resilient seeds, and drip irrigation systems.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record USD 32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
Sources: pressroom.ifc.org, africaneyereport.com
