FMO loan for Peru’s Pampa Baja

By Jim Cornall contact

- Last updated on GMT

Peruvian company Pampa Baja has been given a $15m loan by Dutch development bank FMO. Pic:© iStock/OSTILL
Peruvian company Pampa Baja has been given a $15m loan by Dutch development bank FMO. Pic:© iStock/OSTILL
Dutch development bank FMO has signed a $15m loan with Agricola Pampa Baja S.A.C. (Pampa Baja), a producer of milk, fruit and vegetables in Peru.

Pampa Baja recently acquired 1,370 hectares in Olmos, northern Peru, in addition to its existing 1,200 hectares, in Majes, southern Peru, and the loan will be used for land preparation, irrigation systems, plant and equipment (including cooling and packaging facilities).

Pampa Baja also operates one of the largest dairy farms in the country.  A portion of the project is committed to supporting local smallholder farmers by building bridges between the company and the farmers.

Suzanne Gaboury, director agribusiness at FMO, said, “FMO is proud to play a part in supporting Pampa Baja’s geographical expansion activities, which will allow them to broaden their off-season production window as well as increase food production and economic development in a remote and under-developed region of Peru.”

Generating employment

Pampa Baja’s existing operations generate 1,400 jobs in the region, which can reach up to 2,000 in peak season. It also provides indirect work for around 550 people.

The Olmos operations will generate additional substantial employment opportunities for the local community with 500 permanent and 1,200 seasonal jobs.

As part of the FMO financing, Pampa Baja must implement and remain compliant with an enhanced environmental and social action plan, which includes an integrated water resource management system.

Pampa Baja has additional certifications in place covering land, environmental, food and safety, processing, security and monitoring aspects of its business activities.

Environmental assessments

An FMO spokesperson told DairyReporter that all transactions considered by FMO must undergo an evaluation by environmental specialists whose inputs form an integral part of the due diligence process.

“Consequently, water issues and land conversion for the Pampa Baja project were extensively assessed during due diligence. The land used by the company is only a small part of the Peruvian government’s Los Olmos irrigation project in the north of Peru (approx. 3.5% of the total Los Olmos project),”​ the spokesperson said.

“For the Los Olmos project itself an extensive environmental and social impact assessment was carried out. This assessment demonstrated that the impact on biodiversity is minimal, and no endangered species of critical habitat are present.”

No water issues

The spokesperson noted that the water originates from the Andes and is part of a water project the Peruvian government initiated many years ago.

“Water is taken from a high and steep Andes valley to the west coast. An analysis was performed on the diversion aspects of the government’s project (including land issues, indigenous people, biodiversity aspects) but no issue was detected which raised concern.”

Existing small holder farmers in the area are granted water rights (for the equivalent 5,000 ha), the FMO spokesperson added.

“It should also be noted that the land purchased by Pampa Baja does not interfere with the land of the small holder farmers.”

Related topics: Manufacturers, Fresh Milk, Emerging Markets

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