12 November 2003, Budapest/Rome --
Creating a coordinated approach to financing agricultural
development in Central and Eastern Europe and the Commonwealth
of Independent States (CIS) will improve investment in the
region, FAO said.
At a two-day forum
hosted on 12-13 November 2003 by FAO and the European Bank for
Reconstruction and Development (EBRD) in Budapest, major
international financial organizations, development agencies and
private banks met to create a formal network of institutions
break-up of the Soviet Union and the fall of communism, many
countries of the region faced a triple challenge - to build new
states, found democratic institutions and create market
Financial institutions such as
the EBRD were set up to provide support to nurture the private
sector in a new democratic environment.
"We would like all international financial
institutions working in the region to coordinate their
investment projects and become more streamlined," said
FAO expert François Dauphin.
"At the moment several institutions are
active in the agriculture sector - from policy work to public
investment through to lending to private companies. Without
enough coordination, however, the results are limited,"
A dram of
One example of a joint
approach to financing agriculture is Armenia's Yerevan
Founded in 1887 by an
Armenian who learnt the delicate skills of brandy-making in
France, the company has been making oak-aged brandy for over a
This has been a source of
national pride and a major export earner.
In 2000, a US$20 million loan from the EBRD to the
Yerevan Brandy company, now a subsidiary of a European beverage
producer, has allowed it to refurbish its production facilities
and increase its capital, as well as to develop new markets in
The EBRD loan bolstered the
agricultural sector in a small, land-locked country where almost
half the population depends on farming for their livelihoods.
More than 3 000 Armenian grape growers are
now selling 15 000 tonnes of grapes to the company each year at
In addition to offering
secure markets through long-term purchasing contracts, the
brandy company has been helping local grape producers recover
from severe frost and assist them to obtain chemicals and
fertilizers and plant new vineyards.
In turn, the grape-producers have been financed by the
Agricultural Cooperative Bank of Armenia (ACBA).
The ACBA was the first cooperative bank set up in the
former Soviet Union, the result of a joint project of the
International Fund for Agricultural Development (IFAD), the
European Union and the World Bank.
its own contribution, FAO has been helping the brandy company
fulfil its obligation to the EBRD to carefully use natural
resources by finding a sustainable, local alternative to the
all-important oak barrels, traditionally sourced in France.
This illustrates what can be achieved by
working together: an alliance between public and private
investment has helped meet long-term development objectives.
"Even though our countries of
operations, and especially low-income CIS countries, are a
difficult environment for agricultural investment, there are
success stories," said Gilles Mettetal, Deputy Director
of the EBRD Agribusiness team.
hope the result of this forum will be a solid commitment to set
up a streamlined networking structure so that agricultural
projects in the region can be carried out in a more coordinated
way, and therefore more effectively," he
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