The Situation

Prograin Organic operates in the cultivation, processing, storing and trading of organic grains, seeds and pulses in the Republic of Moldova. Together with a group of Moldovan farmers, who believe in the value of organic farming for the sustainability of the agricultural sector in Moldova, they are committed to supplying high-quality organic products that restore soil health, improve farmers’ incomes and resilience, and generate economic opportunities in rural areas.

In March 2019, their certification body (called Control Union) lost its EU certification license in Moldova and therefore had to reach out for a new certifier. This happened out of their control since their Moldova office in close cooperation with their office in Turkey illegally certified several conventional lots as organic. Given the size of their company and the fact that they work with around 60 different farmers, it took more time than expected for BCS/KIWA to understand their certification complexity. This was slower than expected. In the meantime, the organic corn and wheat prices dropped starting in May 2019 as more and more farmers in France and Germany turned to organic agriculture to serve their clients in western Europe.

The Roadblock

Finding the right client willing to take their volumes for proper prices took more time. They eventually found a Spanish client in December 2019 that was willing to purchase a volume of 2,500 tons. Payments in this regard are based on a 50% bill of loading and the remaining 50% based on the release by the local authority. Due to this delay, they have been facing a liquidity challenge because the farmers are still expecting some late payments of the 2019 season and the seeding campaign of the new harvest is about to start. Farmers are only willing to join the organic campaign at the new seeding season if 2019 harvest payments are taken care of.

Open Road's Response

A loan of $400,000 from ORA enables 48 farmers to cultivate Prograin purchases, including: wheat, spelt, sunflower, peas, oat, corn and soybeans. With this loan the opportunity for growing organic will be maintained and the additional income generated will be preserved for the farmers and the beneficiaries. Corn comprises 30-40% of their total crop volume and 15-30% of their sales volume. The price that farmers were paid for organic corn in 2019 was 15% above the conventional corn market price. 

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