Announcement of Seventy-Five Million US Dollars Loan for Livestock and Agricultural Development in Mexico on May 20, 1971

INTERNATIONAL BANK FOR .RECONSTRUCTION AND DEVELOPf\~ENT 1818 H STREET, N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 71/28 Subject: $75.0 million loan for May 20, 1971 livestock and agricultural development in Mexico The World Bank has approved a $75.0 million loan to help sustain accelerated livestock and agricultural development in Mexico. Despite rapid industrialization in Mexico, agriculture remains a key economic sector, accounting for almost 95% of domestic food consumption and almost 60% of export earnings. Improvements in farming methods and expansion of acreage under cultivation have greatly increased agricultural output during the last 15 years. However, further growth is needed because • of rapid population growth. The project is a continuation of a livestock and agriculture develop- ment program started in 1965 by Fondo de Garantia y Fomento de la Agricultura~ Ganaderia y Avicultura (Fondo) with World Bank assistance. Fo,ndo is a trust fund managed by the Bank of Mexico. The present loan is the Bank's third to Fondo, which provides medium and long-term credit and technical services to farioors, ranchers and agro-industries for increasing and modernizing production. Under the project, investments are expected to be made in about 6,400 livestock farms. About two-thirds of these will be beef cattle farms, approximately one-fifth dairy farms, and the rest pig and poultry producers. Some 4,500 farms growing cotton, oil seeds, wheat, rice, beans and sorghum • will also benefit • /mo1;e Bank P.R. No. 71/28 - Mexico - livestock established or expanded. - 2 - In addition, approximately 60 agro-industrial plants are to be Rural access roads and minor irrigation works • desigr.:-ed to serve groups of small farmers and livestock producers will be constructed and intermediate voltage electrical lines installed at the farm level. Capital investments under the new project will total approximately $193 million. This excludes working capital requirement, which will be financed entirely from domestic sources. About 15% of the capital expend- itures will be contributed by farmers and ranchers (20% in the case of agro-industries), 16% by participating banks, 30% by Fondo from its own resources and 39% by the Bank loan. The Bank loan will be made to the Nacional Financiera, S .A. -·- an official financing institution which borrows abroad on behalf of the Mexican Government -- which will transfer it to Fondo. Fondo (Insurgentes • Norte 423, B.I.S. 98, Mexico, D.F.) refinances agricultural loans made by private credit institutions and regional banks in the system of the National Agricultural Bank for individual projects which have been previously evaluated by Fondo or by Fonda-approved technicians. Supervision of and technical assistance to these projects are, likewise, undertaken by Fondo. The Bank loan will be for a period of 20 years, including a 4-year period of grace 11 with interest at 7~%. Five financial instituti.ons are participating in the loan for a combined total amount of $1,400,000: Bank of America, N.T. & S.A., San Francisco; • The Riggs National Bank, Washington, D.C.; First National Bank of Oregon, Portland; Bank of America International of Florida, Miami; and First National Bank of Minneapolis. - 0 -