The FINANCIAL — The Asian Development Bank (ADB) signed a total of $80 million in assistance to subsidiaries of Kingenta Ecological Engineering Group (Kingenta), a leading compound and specialty fertilizer producer and supplier in the People’s Republic of China (PRC), to help promote environmentally sustainable and innovative agricultural services in the country, improving crop productivity and increasing farmers’ income and livelihoods.
The assistance, under the Environmentally Sustainable Agricultural Input Distribution Project, includes a loan of up to $50 million to Linyi Kingfarm Cooperative Agricultural Services and an equity investment of up to $30 million to Kingfarm Agricultural Services, which includes the International Financial Corporation and Hua Xia Bank as shareholders. Linyi Kingfarm Cooperative Agricultural Services is 100% owned by Kingfarm Agricultural Services (both are abbreviated as Kingfarm Cooperative). The transaction was signed on 31 January and approved by Kingenta’s shareholders on 28 February, according to ADB.
“Kingfarm Cooperative is the PRC’s first modern agricultural service platform dedicated to Chinese farmers. It is committed to building an integrated agricultural value chain by consolidating resources to deliver comprehensive agricultural inputs and services for millions of farmers in the country,” said Kingfarm Cooperative Chairman Jiguo Li.
“Agriculture plays a significant role in the PRC’s development, but the industry must continue to keep pace with the country’s rapid growth and urbanization to ensure food security,” said Xiaole Wang, Investment Specialist at ADB’s Private Sector Operations Department. “ADB’s assistance to Kingfarm Cooperative will provide the much-needed support to improve agricultural production and modernization in the PRC without damaging the environment.”
ADB’s equity investment and loan will help fund Kingfarm Cooperative’s business plan to establish hundreds of new crop production service (CPS) centers, which will provide compound and specialty fertilizers—containing various elements like nitrogen, phosphorus, and potassium, coupled with high-efficiency and innovative features for improved agricultural yield. Apart from the distribution of fertilizers, seeds, and other agricultural inputs, Kingfarm Cooperative will also provide agricultural services to assist local farmers in precision farming using the latest technology, including global positioning systems and geospatial data processing analytics, to allow farmers to address the variability in a field’s yield potential and crop input needs. The establishment of the new CPSs will help farmers analyze large amounts of information including yield maps, detailed field analyses, and soil analyses to create specific crop input recommendations that can be precisely applied across a field.
The PRC’s fertilizer industry has been overusing simple fertilizers—containing only one nutrient—which has reduced soil fertility and crop yields overtime, while also causing environmental damage to farmland and water pollution. The project will help curb the usage of inefficient fertilizers by adopting high-efficiency compound and specialty fertilizers and promote climate-smart agricultural practices in the country. CPSs will also develop integrated pest and vector management plans to assist farmers in reducing their reliance on synthetic chemical pesticides.
The project is ADB’s first nonsovereign assistance to an agricultural input and service provider in the Asia and Pacific region.