ADB Enhances Trade and Supply Chain Finance Support for Food Security in Asia

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MANILA — The Asian Development Bank (ADB) has boosted its support to ease worsening food shortages in Asia and the Pacific by expanding assistance through its Trade and Supply Chain Finance Program (TSCFP) to clear bottlenecks in the import of food and agriculture products.

Over the past 18 months, TSCFP has supported more than 1,900 food and agriculture-related imports valued at $2.3 billion to 10 countries in developing Asia, with most assistance going to Bangladesh, Viet Nam, and Pakistan. To enhance its support, TSCFP has boosted risk limits on trade finance guarantees for food imports by $300 million. When combined with partner commercial bank cofinancing of transactions under the expanded limits, the support can translate into around $500 million of extra finance for food imports in the region.

The additional support will facilitate trade in food and goods such as fertilizers to promote food production, with the new limits allowing ADB to assume extra exposure in transactions with its partner banks to finance the import of these items. The new limits will be reviewed after a year.

“There is a growing food crisis that means more families are going hungry every day in developing countries in Asia,” said TSCFP Head Steven Beck. “Already, a significant share of our trade finance portfolio supports food security. But it’s clear we need to do even more, as high inflation in food prices has eaten into existing global trade finance limits for food imports. The new higher limits enable us and our partner banks to expand trade financing and improve food security in Asia’s developing economies.”

Food systems are under mounting strain from increased frequency and severity of weather extremes, the impacts of the COVID-19 pandemic, supply chain disruptions, and increasing conflict and insecurity. These factors have triggered rising global food prices as reflected by the Food and Agriculture Organization of the United Nations (FAO) Food Price Index that climbed 54% during May 2020­­–June 2022.

The expansion of trade finance for food security builds on ADB’s long-term financing for food and agriculture through governments, agribusinesses, and financial intermediaries. In 2021, TSCFP supported 1,411 transactions valued at $1.6 billion in food and agricultural commodities, and 83 transactions valued at $247 million to support fertilizers and food production machinery.

Backed by ADB’s AAA credit rating, TSCFP provides loans and guarantees to more than 200 partner banks to support trade, creating import and export opportunities for enterprises across Asia and the Pacific.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

 

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