Long-term investment for agribusiness development through LAAD

Like many great ideas, the Latin American Agribusiness Development Corporation S.A.(LAAD) was born because the right people met at the right time. In 1968 the idea of LAAD was conceived by two strangers who got randomly seated next to each other on a flight from Europe to the US. Paul Cornelsen, a senior officer at Ralston Purina Company was flying home after failing to convince the Food and Agriculture Organization of the United Nations that by financing private efforts all the way through the agricultural value chain, they could successfully support projects while simultaneously developing the market. William H. Bolin, a vice president at Bank of America agreed that the best idea would be for a number of major companies interested in reaching Latin American agribusiness to form a corporation. This corporation would provide financial resources for private sector agricultural development in the region by first determining market demand and then creating financial solutions to meet this demand. By centralizing credit risk, compliance, and environmental and social governance matters in one organization, the corporation would enable commercial banks, multilaterals, and development finance institutions to directly approach the Latin American market, from Mexico and the Caribbean to Central and South America.

In 1969, LAAD was founded with capital commitments from several US corporate investors. LAAD’s mission was simple: to promote the economic and social development of Latin America by financing private agribusiness companies that produce agricultural products for export, thus creating rural employment. Over 50 years later, it is so clear that the initial idea was a success, and several of the initial investors (Bank of America, Cargill, John Deere, Dole Food, and Gerber Products) remain as shareholders. Because of LAAD’s long-term approach, positive financial performance along with social and environmental impact, Rabo Partnerships decided to invest and became a shareholder in 1978, which would prove to precede later investments of Rabo Partnerships.

To this day, LAAD’s mission remains to finance small and medium-size agribusiness projects to promote economic, environmental and social development in Latin America under sustainable standards. A foundation to this mission is creating sustainable impact for small and medium farmers in Latin America. LAAD recognizes the importance of transforming agriculture into a sustainable and resilient activity that addresses the social, environmental, and economic challenges posed by climate change and a growing global population. Several initiatives are being developed, including the creation of a “Green Finance Framework” for green loans and bonds, which aligns LAAD’s objectives with the United Nations Sustainable Development Goals (primarily “No poverty”, “Zero hunger”, “Gender equality”, “Decent work and economic growth”, “Responsible consumption and production”, “Climate action”, “Life below water”, and “Life on land”). LAAD is actively working with its clients and partners in transitioning to a climate smart and sustainable agriculture sector.

Since its inception, LAAD has financed projects in more than 25 countries across Latin America and the Caribbean, growing its loan portfolio steadily over the years (currently above USD 1 bln), achieving consistent profitability with remarkable returns on assets and equity, and a healthy capital structure. Also, because of their “boots on the ground” model and diversification, LAAD managed to navigate challenging geopolitical markets and economic cycles successfully. In 2022, LAAD invested in 13 countries (Ecuador, Nicaragua, Guatemala, Mexico, Colombia, Costa Rica, Peru, Chile, Brazil, the Dominican Republic, Paraguay, Honduras, and Belize). and contributed to the creation of a total of over 10,000 new jobs in these countries. It is estimated that LAAD has benefited the creation of over 100,000 jobs for the last ten years in LatAm. Banana and coffee projects have generated the highest total disbursements for several years now. Cattle, soybean, and avocado follow; together, these product categories represent over 46% of LAAD’s project portfolio. Other important products include African palm, grapes, roses, cherries, plantains, sugarcane, peppers, and blueberries.

LAAD investments enable rural and local development. In 2021, LAAD provided funds to a banana producer in Ecuador. The proceeds provided the farm with working capital and supported its renovation. Founded in 2013, this company is family-owned, women-led, and triple- certified (Global GAP, Rainforest Alliance, and Fair Trade). It is also measuring and managing its carbon footprint with the objective of reducing it and eventually achieving net zero emissions. The farm is in one of the top banana-producing regions in the country and is widely recognized for its highly technological implementations in irrigation and drainage systems, as well as its high productivity.

Rabo Partnerships has a solid partnership with LAAD as it has a long-term investment of 45 years. Throughout this time, Rabobank contributed as a funding source provider to LAAD. Rabo Partnerships has also played a valuable role in areas such as Compliance, and knowledge sharing in Corporate Governance and Strategy related topics. Rabobank has one Board Member in LAAD.

Rabo Partnerships is proud of the impact LAAD continues to achieve in Latin America and looks forward to supporting them on their journey to deliver personalized, sustainable agricultural finance services in the region, increasing inclusivity and creating a positive impact on the lives of people in rural communities.

As Mr. Gustavo Martinez Cappetta, LAAD’s CEO, states, “During 50 years, Latin America and the Caribbean have received the unconditional support of LAAD and its commitment with the sustainable development of the region and the well-being of many families involved full-time and part-time in agribusiness sector. LAAD has strongly believed in the potential and important role Latin America has in the worldwide food supply chain.”