Project detail - NETAFIM LTD

NETAFIM LTD

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Who is our client

Netafim is the global leader in precision irrigation for a sustainable future. With 33 subsidiaries, 17 manufacturing plants and approximately 5,000 employees and contracted associates worldwide, Netafim delivers innovative, tailor-made irrigation and nutrigation solutions to millions of farmers, allowing smallholders to large-scale agricultural producers in over 110 countries to Grow More with Less™. Founded in 1965, Netafim pioneered the drip revolution, creating a paradigm shift toward precision irrigation. In 2017, Orbia, a global leader in specialty products and innovative solutions, acquired 80% of Netafim. Kibbutz Hatzerim holds the remaining 20%.

Funding objective

FMO participates with USD 12.9 million in an IFC-led syndicated facility to Netafim Ltd and its Chinese subsidiary. Netafim will use the loan proceeds to get a stronger foothold in Africa, where the enormous growth potential for drip irrigation is, and to further expand in China.

Why we fund this project

Netafim is the largest provider of micro-irrigation systems to large- and smallscale farmers. Micro-irrigation (or precision irrigation) is a crucial tool to enhance food production while saving scarce resources such as water and land. In the context of continuous population growth, changes in weather patterns, biodiversity decline, water scarcity and desertification, irrigation is essential to ensure food security.

Environmental and social rationale

Based on Environmental and Social (E&S) risks/impacts and country/regional context the E&S risk category is B. Material E&S risks and impacts include the following: those associated with the manufacturing of the micro-irrigation components, notably the use of energy and water, the efficient use of raw material inputs, the management of waste and their recycling or proper disposal, and the appropriate management of the company’s human resources and compliance with the labor laws of the countries in which the manufacturing operations are located. E&S risks will be mitigated by the implementation of an Environmental and Social Action Plan. The relevant IFC Performance Standards are PS1 to 3 (Management, Labour and Resource Efficiency). PS4 to 8 (Community, Resettlement, Biodiversity, Indigenous People and Cultural Heritage) are not applicable as sites are in industrial areas and accordingly do not pose a risk to communities. There are no armed security guards present. In addition, the land used to locate manufacturing/production facilities is either on long term agricultural land or land designated and used for industrial purposes (i.e. industrial parks), is obtained using market-based transactions without the need for economic or physical resettlement and does not impact indigenous peoples or cultural heritage.

Country
Global
Sector
Agribusiness, Food & Water
Signing date
10/22/2019
Total FMO financing
USD 8.00 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B