Pran Dairy Limited, a vibrant subsidiary of Pran-RFL Group, is due to receive a $10 million loan from the Asian Development Bank (ADB) to meet its growing demand for working capital and support the dairy value chain amid the pandemic.
The ADB and Pran Dairy signed the loan agreement on Monday.
The lender made the disclosure through a press release issued from its head office in Manila.
The loan will allow Pran Dairy to continue procuring raw milk from 12,000 smallholder dairy farmers within its value chain, and further expand to another 1,200 farmers who would otherwise lose their income, read the press release.
"Covid-19 has caused significant disruptions to the agricultural value chain," said Tushna Dora, investment specialist at the Agribusiness Investment Unit of the ADB's Private Sector Operations Department.
"This has resulted in food waste, while restrictions on labour movement have interrupted the harvest and delayed food processing. It is vital that we provide financial support to food supply chain participants, to bolster the livelihoods of farmers and factory workers while guaranteeing the continued availability of essential food items," added the official.
"Pran Dairy is engaged in adding value and increasing the shelf life of agri-produce through collecting, processing, packaging, and distributing ready to consume products to thousands of consumers at home and abroad," said Uzma Chowdhury, chief financial officer of Pran Dairy.
"The value chain that connects farmers with consumers was disrupted in many ways by the pandemic. The time support from the ADB will help to mend disruptions in the value chain and create stronger linkages between farmers and consumers, boosting the local agri-based economy," he added.
While Pran Dairy has sufficient processing and storage capacity to ensure uninterrupted supply to consumers, the loan will provide emergency working capital for additional support in response to the Covid-19 pandemic.
Earlier, Pran Dairy had applied to the ADB for a loan to meet its growing shortage of working capital caused due to drops in production and sales.
Pran anticipates revenue losses worth $24 million, equivalent to Tk203.3 crore, due to the impacts of Covid-19.
The ADB said, in a concept paper to process the loan, due to disruptions to the supply chain during the countrywide shutdown, and lower demand, dairy product processors did not buy milk.
Small dairy farms sold their milk for half the price, it said, adding they were even compelled to dump their product. The increasing production and storage capacity of Pran Dairy will reduce their losses, the lender hoped.