The International Finance Corporation (IFC) has formed a partnership with Vietnamese producer of crop protection chemicals, Loc Troi Group, a company backed by Mekong Capital and Standard Chartered Private Equity, to roll out an advisory project that will provide sustainable agricultural standards and practices through Loc Troi’s rice production value chain.
The Vietnamese firm will get access to the IFC’s support and network in two years, through which it will develop agricultural standards and practices by the Sustainable Rice Platform (SRP), an international multi-stakeholder partnership, the parties said in a joint statement.
This advisory project is also sponsored by the Canadian government.
Commencing on December 7, it aims to make Vietnam’s agriculture sector expand its global market share, assure sustainable increase in profitability, and improve farmer livelihoods.
Under the partnership, the parties will roll out a training programme for around 4,000 farmers about new farming practices that will help them grow high-quality, high-yielding, and sustainable rice. The project will be implemented first as a pilot and subsequently scaled up.
The initiative goes in harmony with the Vietnamese government’s recent agricultural restructuring plan, which targets to enhance the sector’s competitiveness, amid a rising competition with other major exporters including Thailand, India, Pakistan, Cambodia and Myanmar.
Even as agriculture has been seen as one of Vietnam’s biggest advantages, the sector is slowing over the past two years. The new project looks to help the country better position its agriculture sector to respond to international market opportunities.
“This partnership allows IFC to contribute to the drive to reform Vietnam’s agriculture sector and unlock the door for farmers to access relevant knowledge, skills, and finance to improve their livelihoods in a sustainable manner,” said Kyle Kelhofer, IFC country manager for Vietnam, Cambodia, and Lao.
The IFC has been present in Vietnam for over two decades, lending support for the private sector through both financing and advisory. It has to date invested $5.6 billion in 120 project across the country, spanning infrastructure, manufacturing, agribusiness, renewable energy and financial sectors.
In an earlier interaction with DEALSTREETASIA, Vivek Pathak, regional director for East Asia and the Pacific at the World Bank Group’s private lending arm, said the IFC will probably look at investments in new sectors that facilitate sustainable growth of the country, such as technology.
“IFC brings significant global experience delivering knowledge and expertise in agriculture to help businesses provide better returns to shareholders and create brighter futures for farmers,” Huynh Van Thon, chairman of Loc Troi Group, commented on the new partnership.
Mekong Capital invested in Loc Troi, formerly An Giang Plant Protection, in 2008, and has not divested.
With a nationwide distribution network of 25 branches, and more than 5,000 dealers and retailers, the company dominates the market with a 20 per cent plus market share, the private equity firm said.
Loc Troi, which boasts to be the first in Vietnam to launch an agricultural science centre, is also the country’s second largest distributor of seeds, focusing on rice and hybrid corn seeds.
Loc Troi was also a portfolio company of other private equity investors in Vietnam, including VinaCapital and Vietnam Phoenix Fund (formerly DWS Vietnam Fund, managed by Duxton Asset Management), which in 2014 exited the firm to Standard Chartered Private Equity. Another existing PE shareholder in Loc Troi is PENM Partners.