EBRD Finances $100M for Louis Dreyfus Regional Expansion

The European Bank for Reconstruction and Development (EBRD) has agreed to provide $100 million to back the regional expansion of global agricultural commodity trader and processor, Louis Dreyfus Company.

The facility will be earmarked to fund Louis Dreyfus’ capital needs in eight markets: Bulgaria, Egypt, Kazakhstan, Poland, Romania, Tajikistan, Turkey, and Ukraine – targeted regions under the company’s plan to connect agricultural production centers in Eastern Europe with growing consumer markets in North Africa.

“This project is bringing agricultural producers in eastern Europe closer to consumers in North Africa to strengthen global food security,” said Gilles Mettetal, Director for Agribusiness at the EBRD. “The Bank is happy to continue supporting the expansion of Louis Dreyfus Company’s operations, which are strongly engaged in the region.”

Louis Dreyfus and the EBRD

Founded in 1851, Louis Dreyfus has grown to command an enormous presence in the global agricultural value chain, from origination to distribution. The company is present in five regions: Asia; Europe, Middle East & Africa; North America; North Latin America; and South and West Latin America, and across 12 platforms: coffee, cotton, dairy, fertilizer and inputs, grains, juice, oilseeds, metals, rice, sugar, freight, and finance, according to the company website. Distributing approximately 81 million tons of commodities per year through its extensive worldwide network of assets, the company oversees operations from farm to fork, feeding more than 500 million people per year.

The EBRD has been working with Louis Dreyfus in Ukraine since 2000, and now supports the company as it created synergies across global markets including Europe, Central Asia, and North Africa.

“Thanks to the EBRD’s sustained support over the past 10 years we continue to expand the geographical scope of our operations in line with our strategy and increase the efficiency and breadth of our supply chain, in order to meet the need for our products and services in this part of the world and provide even better service to our growing customer network,” said Gonzalo Ramirez Martiarena, CEO of Louis Dreyfus.

One such mutually beneficial relationship exists between Ukraine and Egypt. Egypt, being the top importer of wheat in the world, is also the top export destination market for Ukrainian wheat, while Ukraine is also the main supplier of corn to the country. The goal of enhancing and strengthening the export/import activities between these two countries is being seen as a means of improving global food security. Toward this goal, the EBRD and Louis Dreyfus plan to continue to cooperate in both countries on policy dialogue in the hope of improving regulations, public-private dialogue in Ukraine, and competitiveness in the private sector in Egypt, according to the bank.

This facility also will enable Louis Dreyfus to enter the cotton sector in Tajikistan for the first time. Although the company has leveraged previous funding from the EBRD to enter the cotton sector of Kazakhstan, becoming the top exporter in the country, this latest partnership between the bank and the company will enable the company to gain access to an industry in Tajikistan that supports approximately half of the country’s rural population.

Recent Activity

Although faced with managing internal challenges in recent years, Louis Dreyfus has remained active on the global agribusiness stage. In January of this year Louis Dreyfus and its partner Brazil’s Amaggi Group announced that they had agreed to sell a 33 percent stake in their existing Brazilian joint venture to Japan’s Zen-Noh Grain Brazil, making Zen-Hoh an equal partner in the venture.

The partnership between Amaggi and Louis Dreyfus dates back to 2009 when it was launched under the name Amaggi & LD Commodities with the goal of originating soybeans and corn, financing farmers, and being active in the exchange and sale of seeds, fertilizers, and agrochemicals in the Brazilian region known as ‘Matopiba’, consisting of the states of Bahia, Maranhão, Piauí and Tocantins. The joint venture also holds a 25 percent participation in the Tegram grain terminal at the Itaqui port in Maranhão. The remaining 75 percent in the terminal, which is currently under development in the north of Brazil, is controlled by Switzerland’s Glencore Plc and Brazil’s NovaAgri and CGG Trading according to Reuters.

“With this incorporation, the joint venture will be able to count on the experience of one of the world’s leading cooperatives...,” Louis Dreyfus said. “…which will contribute to operations in one of the most promising grain producing regions in Brazil.”