IFC is investing $50 million in Sugal Chile Limitada—a Chilean subsidiary of the Sugal Group, the world’s second largest producer and exporter of tomato paste, to support farmers, while also reducing greenhouse-gas emissions and boosting energy and water efficiency in Chile.
The aim of the IFC investment is to create market competitiveness and contribute to the country’s climate goals.
IFC’s loan will help Sugal Chile expand its operations, which include starting a new tomato paste production line in Talca, maintaining the Tilcoco Plant, adopting energy efficiency measures by replacing a coal boiler by a more efficient one operated with liquified petroleum gas, and boosting productivity through process reengineering.
The funding will also allow the company to reach more farmers, helping them prepare land, procure fertilizers and seeds, and install drip irrigation systems.
The financing package comprises an “A” loan of up to $25 million and up to $25 million from IFC’s Managed Co-Lending Portfolio Program, an innovative syndications platform that allows institutional partners to participate in IFC’s loan portfolio. The project is under IFC’s Global Food Security Platform, which aims to support the sustainable production of essential staples—for example, processed tomatoes—in developing countries, especially with soaring food prices.
Miguel Baptista, Global CFO of Sugal Group, said, “We are thrilled to partner with IFC to improve our operations in Chile in order to achieve more sustainable and climate alignment processes. Sugal supports behaviors that contribute to a smaller environmental footprint by reducing consumption, conserving resources and managing waste properly”.
IFC will also share international best practices with the company to help improve its environmental and social standards. The investment contributes to climate mitigation (33%) by adopting energy efficiency initiatives (including replacing coal boilers) and climate adaptation by financing drip irrigation systems and drought-resistant seeds. The greenhouse-gas emissions (GHG) savings are estimated at 6,400 tons of carbon dioxide equivalent (“tCO2eq”) per year.
“Companies like Sugal can play a crucial role in deploying new methods and technologies that can reduce the climate footprint of the agricultural sector,” said Manuel Reyes-Retana, IFC’s regional director for Latin America and the Caribbean. “We are committed to helping the agricultural companies become more sustainable,” he added.
IFC has made agribusiness a priority because of its potential for broad development impact and especially strong role in poverty reduction. IFC combines investments and advisory services to help the sector address higher demand and escalating food prices in an environmentally sustainable and socially inclusive way. In FY22, IFC’s long-term commitments in agribusiness and forestry totaled about $1.1 billion, including $408 million mobilized from other investors.
