Grupo Andre Maggi Company Description:     Amaggi, a major soybean merchandiser, crusher, and exporter was established in 1950 in the state of Parana by the André Maggi family of Italian origin.  In 1979, Amaggi moved to the state of Mato Grosso to take advantage of the enormous agricultural potential of the Center-West region of Brazil.  At that time, total soybean production accounted for less than 1% of Brazils total production.  In 1983, the company started pre-financing farmers.  In 2001, the company entered the crushing business to take advantage of the added value of soybean by-products, such as soyoil and soymeal.  The companys sales volume was 1.8 million metric tons in 2001, mostly for the export market (88%) and with total sales of US$342 million equivalent.     The companys working capital cycle starts with the advances to farmers at the beginning of the cropping season (June-July), and ends with the building up of soybean inventories when the company purchases and stores the soybeans at harvest time (January  April).  The companys peak sales occur following the harvest, in May  June.       Project Description:     The project consists of financing the growing working capital requirements of Amaggi.  Amaggis working capital consists mainly of (i) farmers advances, such as inputs and cash for soybean production, and (ii) inventory of soybean and its by-products.  It is proposed that IFC finances up to US$30 million of the projected permanent working capital increase, which would have otherwise been financed by short-term funding.     IFC Role:     The proposed project will back a company that has demonstrated its capability to respond to challenging infrastructure issues and created an efficient export channel for its soybeans. Also in line with the World Bank''s Country Assistance Strategy (CAS), the IFC loan will stabilize the balance sheet structure of a midsize company in one of the countrys most important export commodities.  Because of the financial intermediation role played by Amaggi in its farmers financing program, the IFC project will be indirectly reaching almost 900 farmers which benefit from companys advances in a cost effective approach.     Developmental Impact:     Section A:  The project will provide the company with a more stable source of financing for a portion of its permanent current assets, namely advances to farmers and a minimum inventory of beans, particularly for its crushing operations, given the deterioration in the regional economy and the possible contagion of the Argentine crisis to its Mercosur neighbors. This long-term financing will substitute short term debt to mitigate the possible risk of refinancing which could follow from a financial crisis in the country. As such, a financial and economic rate of return cannot be meaningfully calculated.     Section B: The experience of other countries (Asia, Argentina) indicates that, in times of crisis, agribusiness companies dependent on short-term debt are forced to restrict their operations. In the case of Amaggi, advances to farmers would most likely be curtailed, with consequences on farmers ability to purchase inputs and reach current production levels. Also, the company would be hard pressed to purchase and store soybeans from the farmers, thus limiting its processing season. More soybeans would be directed to exports rather than storage, which would result in lowered prices at harvest time because of bottlenecks in logistics. A more stable source of funding for working capital will therefore provide partial insurance against the refinancing risk, with widespread benefits to farmers and the companys operation.    Section C: Supervision of the development impact will focus on the companys ability to sustain the pre-and post-harvest financing of the soybean supply chain: (i) advances to farmers; (ii) purchases of soybeans; and (iii) crushing of soybeans.