Yangon subsidiary of an Indian agri-logistic group granted USD $ 3 million loan from IFC to expand warehousing and logistics services in Myanmar

The Yangon subsidiary of an Indian agri­-logistics group has secured a US$3 million loan from the International Finance Corporation (IFC), the investment arm of the World Bank.

Delhi-based Sohan Lal Commodity Management (SLCM) will use the capital to expand its warehousing and logistics services in Myanmar. The terms of the loan were however not disclosed.

The company handles cotton, black pepper, rice, wheat, pulses, maize, sugar and spices in Myanmar, for both imports/exports and domestic consumption, according to SCLM assistant manager Diksha Arora. The Myanmar unit has managed 3.24 million square feet of commodity storage space in 127 industrial zones and handled 10.14 million tonnes of commodities.

Agriculture is the backbone of Myanmar’s economy, while more than half of the national population live in rural areas. But the infrastructure and technology necessary for farmers and traders is severely underdeveloped. Many local warehouses are completely lacking in operational equipment and technology, such as CCTVs, dock levellers or a stable power supply.

Farmers in Myanmar are often forced to store harvested products to sell at a later time. The poor warehouse conditions mean the storage leads to substantial losses, which the IFC estimated to be at around 20 percent.

The biggest hurdle is for the agri-logistics industry to understand the business model, Ms Arora added. Another obstacle is the limited understanding by Myanmar financial institutions on how to evaluate and manage agri collateral.

"Agriculture like e-commerce has gone through an immense change in the past few years. Infrastructure used to be a challenge in the past. Now, cutting-edge technology makes it possible to manage and handle agri commodities despite location, infrastructure, weather pattern or crop.”

In particular, SCLM has reduced post-harvest losses to 0.5pc in Myanmar, said CEO Sandeep Sabharwal. The IFC loan will further help farmers store higher volumes and reduce post-harvest losses caused by infestation, excess humidity and inadequate storage.

Myanmar’s agriculture provides employment to 53pc of the labour force, IFC manager for Myanmar Vikram Kumar highlighted, and is key to alleviating the country's poverty. “A World Bank research has shown that progress in the agricultural sector was directly responsible for at least 46pc of the reduction in poverty between 2005 and 2015.”

Since 2013, the Washington-based lender has invested over $1.3 billion in the country. Last month it announced a $20 million loan to the Myanmar subsidiary of German retail group Metro AG.

(The Myanmar Times: https://www.mmtimes.com/news/indian-agribusiness-granted-ifc-loan-expand-myanmar-facilities.html )

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