Food and agribusiness is among the sectors severely affected by the coronavirus disease (COVID-19) pandemic. Quarantines and lockdowns to control the spread of the virus have disrupted food supply chains. Many factories, including food manufacturers, had to close. Agricultural production suffered from shortages of labor, seeds, fertilizers, and animal feed.
The pandemic’s impact on food supply increased the risks of food insecurity. Reduced income and livelihood opportunities and rising food prices also pushed more people into hunger and malnutrition. These worrisome trends make assistance to the food and agribusiness sector critical during the COVID-19 crisis.
Cash flow problems
Like many companies around the world, PT Cisarua Mountain Dairy struggled to maintain its operations during the crisis. The Indonesian company, which is known for the Cimory brand of dairy products, could not replenish its stock of imported materials because of global logistics disruptions and cash flow problems. The appreciation of the US dollar against the Indonesian rupiah made it more expensive to import. Customers that were hard hit by the crisis were also late in their payments.
The company needed to improve its liquidity to get its business going as well as to continue to support the livelihood of 3,300 local farmers, who supply it with raw milk.
Last year, Cisarua received liquidity support from the Asian Development Bank (ADB), which is helping financially troubled agribusinesses as part of its COVID-19 assistance to member countries in the region.
In Southeast Asia, ADB has approved $5.375 billion in financing to help countries cope with the devastating impacts of the pandemic based on a September 2020 report. Its support focuses on boosting healthcare responses, enhancing social protection, and protecting businesses and economies.
Protecting livelihoods, creating jobs
The $15 million loan to Cisarua will help sustain its operations by providing additional funds for working capital and operational expenditures. It will enable the company to keep its long-term commitment to support local farmers by continuing to pay them a price higher than the going rate for raw milk.
ADB’s COVID-19 emergency support will also cover the cost of personal protective equipment for the company’s 2,100 factory workers, 3,300 dairy farmers, and more than 1,500 sales agents in the field.
In addition, it will enable the firm to hire 250 more women as door-to-door sales agents under its Miss Cimory distribution program. Launched in 2012, the program was created to hire and train women who are from lower socioeconomic backgrounds to become part of the Cimory salesforce, and it covers Bali, Java, Nusa, Sumatra, and the Southeast Sulawesi peninsula.
ADB will also support the training of at least a thousand women farmers on best practices in dairy farming and on financial literacy this year.