March 29, 2018
COVL coffee processing plant(Photo courtesy of OIL)
Viet Nam coffee farmer(Photo courtesy of OIL)
On March 28, Japan International Cooperation Agency (JICA) signed $75 million in a loan agreement with Café Outspan Vietnam Limited (COVL), a local subsidiary of Olam International Limited (OIL) in Vietnam focused on soluble coffee manufacturing, for the Coffee Value Chain Enhancement Project. The project is co-financed with the Asian Development Bank (ADB), which also committed $88 million in total with OIL and COVL on the same day.
Olam will improve inclusive and sustainable agricultural value chains that will benefit up to 20,000 smallholder farmers in Viet Nam, as well as in Indonesia, Papua New Guinea and Timor-Leste. JICA’s loan will be mainly for expanding the COVL coffee processing plant, and will contribute to agricultural development and the advancement of industry in Viet Nam through enhancing the coffee value chain.
As the socioeconomic backbone of the country, agriculture plays a vital role in Viet Nam. The rural population accounts for 66 percent of the total population, and smallholder farmers with 0.5 hectares or less land account for 70 percent of the rural population. Boasting, after Brazil, the second largest coffee production in the world with approximately 17 percent of the market share, Viet Nam is the world’s largest producer of Robusta coffee, which is particularly well-suited for soluble coffee. The project will advance the agricultural product processing industry, which is positioned by the Government of Viet Nam as a strategic priority toward becoming an industrialized country, and reduce poverty through farming supports to smallholder farmers, thereby contributing to Sustainable Development Goals (SDGs) 2 (sustainable agriculture) and 9 (inclusive and sustainable industrialization).
OIL, based in Singapore, is a leading agribusiness company with presence in 70 countries and 4.3 million smallholder farmers network, upholding a basic strategy to promote sustainable agriculture through a wide range of programs for more than 300,000 farmers in 19 countries. Since September 2015, Mitsubishi Corporation has been a strategic investor and the second largest shareholder of Olam.
The project is JICA’s first private finance transaction co-financed with ADB (except for LEAP Fund*). It is also the first agriculture sector project supported by JICA private sector investment finance since its recommencement in 2012. JICA will continue to enhance partnerships with development financial institutions and will proactively promote the private initiative for socioeconomic development in developing countries.
* The Leading Asia’s Private Infrastructure Fund (LEAP Fund) is a trust fund established by the ADB for supporting private infrastructure investment across Asia and the Pacific.