Agri-industry development loan

Final PES covers the period 1/78-7/81 and is based on interviews with project personnel and site visits. Despite long implementation delays, the project succeeded in creating new production and marketing activities. Subloans were provided to 11 food processing firms (four dairies, three fruit processors, a poultry processor, a food dehydrator, a bottling plant, and a meat processor) and to a new rural machinery pool service center. Ten of the sub-borrowers have already either developed or expanded nontraditional exports (including cheeses, processed fruits, poultry, dried onions, fruit concentrates, and corned beef). By the end of 1981, all sub-borrowers will be producing at full capacity and exporting over 60% of their production. Moreover, the project expanded and strengthened the financial appraisal capacity of the Government of Uruguay"s (GOU"s) Unidad Asesora de Promocion Industrial; created a Development Investment Financing Fund for agricultural and other industries; and established an industrial credit guaranty scheme which reduced commercial banks" collateral requirements. Because of GOU procedures in setting up the project, private industry"s lack of experience in submitting projects for credit, and commercial banks" initial reluctance to lend on project terms, however, it took nearly 30 months to fully establish the project. Once these problems were resolved, credit and technical assistance were provided to sub-borrowers in an efficient manner and both bankers and businesses responded enthusiastically. The project directly benefited transportation firms and the rural inhabitants who obtained jobs from sub-borrowers and it indirectly benefited small- and medium-sized farmers who sell crops to sub-borrowers. Project experience shows that it takes considerable time to initiate and make operational new lines of credit. The only action decision is to effect payment of $128,305 to the sublender"s corresponding bank for equipment purchased by the dehydrating plant.