ADB, Tavan Bogd Group Companies sign loan to support wheat supply chain www.montsame.mn
Ulaanbaatar /MONTSAME/. On September 29, the Asian Development Bank (ADB), Ulaanbaatar Flour Limited Liability Company (UBF), and Tavan Bogd Foods Limited Liability Company (TBF) signed a $15 million loan (in togrog equivalent) to support the wheat supply chain in Mongolia during the coronavirus disease (COVID-19) pandemic.
The amount—comprised of a $10 million assistance to UBF and $5 million for TBF—will deliver liquidity support for the companies’ operations, which will help sustain the livelihoods of thousands of Mongolian wheat farmers and farm workers, in addition to the employees of UBF and TBF.
Wheat is milled to produce the country’s main staple, wheat flour. Food price hikes due to trade disruptions from containment measures would cause hardship for extremely poor households unable to afford meat and milk products. More than 25% of Mongolians are moderately or severely food insecure.
“Wheat is the primary agricultural crop in Mongolia, so reinforcing the supply chain to cope with disruptions caused by the pandemic will secure the incomes of many workers in farms, factories, and retail outlets,” said ADB Country Director for Mongolia Pavit Ramachandran. “The liquidity support to these companies will enable them to build enough buffer inventory during the pandemic, which will help avoid sharp increases in food prices.”
“We are grateful to ADB for its leadership and initiative to offer assistance in uncertain times brought about by COVID-19,” said Executive Vice President of Tavan Bogd Group Hulan Dashdavaa. “In fact, ADB was one of the first banks to reach out to the private sector in Mongolia to help address the economic impact of the pandemic. As a leader in the market, UBF is committed to continue manufacturing and consistently supplying high-quality flour to consumers throughout Mongolia. The loan will also help TBF continue to offer global standard food products and services to consumers and source more from local vendors.”
The two companies are part of the Tavan Bogd Group, one of the country’s largest diversified business groups. UBF is a leading wheat miller with 35% of the wheat flour market in 2019. TBF operates major fast-food chains and is a key player in the food delivery industry.
The loan will complement other ADB COVID-19 assistance to Mongolia, which includes a $100 million COVID-19 Pandemic Response Option, $30 million in additional financing for the Fifth Health Sector Development Program, and a $26.4 million loan to lessen the socioeconomic impacts of the pandemic through the Shock-Responsive Social Protection Project.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.