Experience of Rabobank

October 23/24 2008

October 23/24 2008– First Kazakh Grain Forum Astana

Financing the Kazakh grain sector

Experience of Rabobank


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Who is Rabobank?

• Rabobank is the largest Allfinanz financial service corporation in the Netherlands

• Rabobank is an AAA rated financial institution

• Rabobank has an international food & agri focus

• Rabobank delivers financial solutions through a network of branches in 41 countries

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Rabobank Agri-commodity finance

1. Financing the storage and global trade flows of agri-commodities

2. Focus on:a)The large international trading companiesb)The key local integrated exporters in emerging markets

3. Goal: to cover the full agri-commodity chain (link a with b)

4. Most important financial products:a)Stock financing (based on warehouse receipts and pledges)b)Transactional trade flow finance (based on shipping documents)c) Ownership based finance (keeping the goods in ownership of the

bank via special Rabobank Trade Vehicle)d)Borrowing Base financing (financing various classes of current

assets)


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SWOT Kazakh Grain Sector

Strengths

• Warehouse Receipts System

• Grain Law /Indemnity Fund

• Integrated companies

• High wheat quality

Weaknesses

• Logistics (wagon shortages)

• High transport cost to export ports

• Low yields

• Local bank finance

• Transparency of companies

• Financial management

Threats

• Banking crisis

• Slow down world economy

• Large unsold stocks / price risk

• Exchange rate risk

Opportunities

• Yield increase by better inputs

• Export logistics abroad (e.g. Latvia)

• China, Middle East, North Africa

• World demand growth for wheat


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Our experience in Kazakhstan

• We started trade financing under the EBRD WRP program in 2001

• FCC was first client in 2003/04

• Gradually building up portfolio of private grain integrators

• Minimum transparency required: IFRS audited financials

• Security: pledge on grain/WRs + inspections by SGS

• Grip on cash flows (collection account pledged to Rabobank)

• Additional security via assignment of export contracts

• Focus is on tenors up to 1 year.


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Conclusions

1. Kazakhstan has some unique competitive advantages:a)High wheat qualityb) Integrated sectorc) Land sized)Grain law/WR system

2. But to really explore these advantages it must address some key bottlenecks:a)Bring down cost per mt by increasing yieldsb)Solve the export problems / wagon shortagesc) Further improve transparency of the playersd) Improve availability of working capital

3. Rabobank will continue to support the Kazakh grain sector


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Thank you for your attention!

[email protected]

Tel: + 31 30 216 2797

Fax: + 31 30 216 2964

mailto:[email protected]

Experience of Rabobank

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