EBRD and FINTECC support Agrofusion expansion
In order to support the expansion of tomato farming and processing activities and improve irrigation and plastic waste treatment practices, the EBRD is providing a US$ 15 million loan to Agrofusion Group (Agrofusion), the largest tomato paste producer and exporter in Ukraine.
Agrofusion, a vertically integrated and family-owned company, is planning to finance the construction of its third tomato processing plant, which will be able to produce around 34,000 tonnes of tomato paste. The planned expansion will help achieve a 50 per cent production capacities increase at Agrofusion. The proceeds will also fund the construction of new greenhouses, the procurement of necessary agricultural equipment as well as its working capital needs.
The company will also implement a range of high-tech farming solutions suggested by the EBRD’s Finance and Technology Transfer Centre for Climate Change (FINTECC) programme, which will reduce water leakages in the irrigation system and significantly reduce the amount of plastic waste generated during the production cycle.
The investment will address the issue of poor irrigation infrastructure in southern Ukraine, which is depleting water resources and contributing to soil degradation. The project will benefit from an US$ 700,000 incentive grant provided through FINTECC.
The investment will provide green agribusiness solutions by introducing modern water management practices. This is in line with the EBRD’s support for green economies. The Bank believes that a well-functioning market economy should be competitive, inclusive, well-governed, green, resilient and integrated.
A newly introduced long-term drip irrigation system will ensure the targeted application of water, aimed at annual water savings of up to 1.2 million cubic metres (or up to 20 per cent compared to the existing system). It can also be used to inject fertilisers into the soil in a more efficient way. Once implemented, the investment will lead to annual energy savings of 66,000 GJ and CO2 reductions of up to 3,700 tonnes.
The launch of a new processing plant will allow Agrofusion meet growing demand for organic food products both outside Ukraine and internally and strengthen its external competitiveness. In 2016 alone its export sales reached 40,000 tonnes to 26 countries.
The FINTECC programme designed to transfer technology in the area of climate change mitigation and adaptation was launched in Ukraine in February 2016. The three-year framework is supported by US$ 7 million grant funding from the Global Environment Facility (GEF) and a €4 million grant from the EU’s Neighbourhood Investment Facility (NIF).
The EBRD is the largest international financial investor in Ukraine. To date, the Bank has made a cumulative commitment of almost €12.2 billion through 377 projects since the start of its operations in the country in 1993.