IFC, a member of the World Bank Group, is providing a $15 million loan to dairy company Parag Milk Foods for expanding its milk processing facilities, to enhance dairy farm productivity and boost incomes in rural India.
With IFC's investment, Parag will expand supply chain linkages across over 50,000 farmers and food suppliers and improve food safety standards. It will also create more jobs, especially for women in the town of Manchar in Pune district in the state of Maharashtra where one of Parag's plants is located. The loan will assist the company in expanding its portfolio to more value-added products like whey powder and ultra-high temperature milk.
"IFC's global knowledge and expertise in the dairy sector will help the company develop best practices to increase milk yields, adopt environmental and food safety standards and upgrade technology and operational practices," said Devendra Shah, Chairman and Managing Director, Parag Milk Foods. "The project will benefit dairy farmers, a critical link in the company's supply chain."
The financing will also improve Parag's operational efficiency through plant automation, and expand its procurement and distribution networks. Parag distributes its products through 60 super-stockists, 1,000 distributors and over 120,000 retail outlets across India.
"Dairy is a major source of income for a large population of rural India. IFC works with supply chain integrators to provide small farmers and rural businesses access to finance, access to markets, advice and extension services," said Serge Devieux, IFC Director for South Asia. "IFC's support to Parag will help create direct and indirect jobs and boost growth of small and medium enterprises."
Globally, IFC invested $4.5 billion across the agricultural value chain in 2013. IFC's agribusiness strategy aims to promote inclusive growth and environmental and social sustainability in agricultural supply chains.
Parag has a milk processing capacity of around two million liters per day at its two plants in Maharashtra and Andhra Pradesh. The company has a well-diversified product portfolio ranging from liquid milk to value added products like cheese, ghee, paneer, butter, dairy whitener and yogurt.
