Agricultural Development Fund

Agricultural Development Fund

Ministry of Agriculture, Irrigation and Livestock (MAIL) is contributing tonstrengthen key agricultural value chains in Afghanistan, through the Agricultural Development Fund (ADF).
Over 85 percent of the chicken consumed in Afghanistan is imported from places as far as Brazil. A trader in the western city of Herat saw this as an opportunity and in 2007 established a slaughterhouse and freezing plant for chicken with the capacity to process 250,000 birds per month.
Initially 100 percent of his supply came from somewhat disorganized purchases from small scale poultry growers, and 3 farms owned by the company, with a total output of 40,000 birds per month.

The company later established a mother stock farm and a hatchery with thecapacity to ultimately match the processing capacity of the slaughterhouse, however due to insufficient capacity at the broiler farms, the company had resorted to sell day-old chicks, while underutilizing the slaughterhouse and freezing plant.
A loan from the ADF enabled the company to increase the production of family owned farms to 59,000 broilers per month, a 47 percent increase. The increase in the scale of the farms and in the utilization of the slaughterhouse resulted in the creation of 22 full time jobs, while positioning the company as the single largest producer of frozen chicken in Herat province.

The company distributes whole chickens, and quarters through a network of retailers in Herat City, while also supplying wedding halls and restaurants.

The company owner is one of over 16,000 farmers and agribusiness entrepreneurs that have had access to finance through the ADF.

The ADF was established through a $100 million grant provided by USAID to the government of the Islamic Republic of Afghanistan and is successfully filling the gap that limited farm and non-farm agricultural investments.

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The modernization of Afghan agro industry constitutes a priority for the Government of the Islamic Republic of Afghanistan. It is aquot;>This ADF loan constitutes a clear example of how finance is being used to cement the links in the agricultural value chains, supporting inclusive and sustainable agricultural development.

Since 2010 the ADF processed loans worth 2.72 Billion Afghanis ($54.4 million USD) and disbursed 1.25 Billion Afghanis ($25 million USD) to over 16,000 rural households in 30 provinces of Afghanistan.

The ADF was established by the Government of the Islamic Republic of Afghanistan with the support from the United States Government.

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Afghan Rice Mill Processing Company, based on Jalalabad, Nangarhar province was established some 4 years ago and had the capacity to process 30 metric tons of rice paddy per day, however last year the company was only able to process 187 metric tons, due to lack of working capital.

The Agricultural Development Fund provided the Company a loan that will enable it to provide inputs on credit to 100 rice producers from Kunar, Laghman and Nangarhar provinces. This innovative approach enhances the level of certainty for both, rice farmers who now have a secured market, and the milling company which can produce a realistic marketing plan based on projected supply or rice paddy. This year Afghan Rice Mill Processing Company expects to process 1,000 metric tons of rice paddy, which constitutes an increase of over 400 percent.

In addition to the loan the ADF is also providing the company technical assistance in quality control, which will also benefit some 120 farmers who do not sell their paddy rice, but rather use the company's milling services.
This ADF loan constitutes a clear example of how finance is being used to cement the links in the agricultural value chains, supporting inclusive and sustainable agricultural development.

As of December 31, ADF had processed loans worth 2.55 Billion Afghanis ($49 million USD) and disbursed 1.21 Billion Afghanis ($23.3 million USD) to over 15,000 rural households in 30 provinces of Afghanistan. ADF clients have already repaid 600 million Afghanis ($12 million USD) maintaining a default rate of 2.08 percent, which is well below the norm.

The ADF was established by the Government of the Islamic Republic of Afghanistan with the support from the United States Government.

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On June 20, 2013 the Agricultural Development Fund (ADF), celebrated the grand opening of its Provincial office in Bamyan. While since 2011 the ADF kept a small office within the Provincial Delegation of MAIL to serve a small number of clients, the increase in the number of loans provided in the province required of a stronger presence. Therefore the event celebrated two main milestones:

  • The formal opening of the Provincial Office of the ADF, in partnership with OXUS, which will allow thousands of farmers from Bamyan province to access credit, both at wholesale level from the ADF and at retail level from OXUS
  • Recognition of outstanding ADF clients; those cooperatives that have complied with their commitment to pay their loans on time during the 2012-2013 season

Bamyan agricultural cooperatives now received ADF loans for the third year. The first one was in the spring of 2011 in which 438 potato growers members of 7 cooperatives were provided with loans for seed and fertilizer; later, in the spring 2012, 700 potato growers members of 27 cooperatives accessed loans for agricultural inputs; and just a few weeks ago 1280 potato growers members of 44 cooperatives from Bamyan province received over AFN 112,000,000 Million in loans.

H.E. Mohammad Asif Mobaligh, Deputy Governor of Bamyan stated: “People are shifting from the classic ways of farming to modern ways, the main product in Bamyan is potatoes, but due to bad roads and lack of storage and agricultural credits they couldn’t sell for a good price. Now we have Ag credit, more than 1,000 potato storage units, and good roads.”

Potato production is a mainstay in Bamyan, however productivity was low due to two fundamental factors: the high price and questionable quality of fertilizers available in the province, and the use of recycled and low quality seed.

To date ADF has approved loans for over US$69million. These loans are directly benefiting some 20,000 farmers in 30 provinces. The work carried out with potato growing cooperatives in Bamyan province is one of several examples of how credit is supporting the growth of agriculture.

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Wheat is the single most important staple crop in Afghanistan, and therefore a strategic value chain for the Afghan government in general and the Ministry of Agriculture, Irrigation and Livestock in particular.

Wheat processing also produced byproducts that are of importance to the livestock industry.

Since 2010, the Agricultural Development Fund (ADF) has provided several loans to flour mills around the country. Most recently the ADF provided a loan to a Flour Mill company based in Kabul, with the fundamental purpose of enabling the company to increase throughput by procuring domestically grown wheat.

This ADF loan is strengthening and expanding on the concept of producer networks, a scheme that the company has been promoting in Balkh, Kunduz, Takhar, Samangan, Baghlan, and Jawzjan provinces.

The loan is supporting the industry in several ways: a) the company's efficiency has substantially increased from using 30 percent of its installed capacity to 80 a current percent, b) increasing effective demand for wheat, while strengthening the vertical coordination along the value chain, and c) Increasing output with positive effects on food availability. The latter has allowed the cmpany to become a regular supplier to the World Food Program.

To date ADF has approved loans for over US$76million. These loans are directly benefiting over 20,000 farmers in 30 provinces. The work carried out by this company is one of several examples of how credit is supporting the growth of agriculture value-chains.

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Salehi Dikundiwal Brothers Agricultural Service Company is one of 180 ADF clients in Kabul. The Company is producing vegetables in green houses and supplies fresh cucumbers, tomatoes, peppers and zucchini to wholesale dealers in Kabul, who in turn supply retail stores.

In Spring 2013, ADF provided Shariah Loan to finance plastic sheeting, drip irrigation equipment and a tractor. The borrower also used a portion of the loan to pay seeds, fertilizers, fuel and labor costs.


With the use of better quality inputs and equipment, the yield increased by 33% (from 3.75 Kg to 5 Kg per plant), resulting in an overall increase in production from 143 MT to 492 MT, equivalent of 349 percent. The Company also increased the number of greenhouses from 22 to 56 and employees from 22 to 60. In addition to the loan, the ADF provided Salehi Daikundiwal Brothers with technical assistance for the introduction of food safety and quality standards.


This is a clear example of how access to finance can modernize agriculture, increase productivity; contribute to the expansion of high technology operations, while creating job opportunities. All these benefits contribute to economic growth and social stability.

H.E. Mohammad Asif Rahimi, Minister of Agriculture, Irrigation and Livestock visited this ADF borrower and said "The ADF is one of the most successful initiatives supported by MAIL and is definitely the one that is unleashing the potential of Afghan agriculture".

To date the ADF has approved loans for over US$76 million. These loans are directly benefiting some 21,000 farmers in 30 provinces.

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THIS YEAR 1,280 FARMERS, MEMBERS OF 44 COOPERATIVES FROM BAMYAN PROVINCE HAVE HAD ACCESS TO AGRICULTURAL CREDIT THROUGH THE ADF.

On September 26, the Minister of Agriculture, Irrigation and Livestock and the Governor of Bamyan province, together with the Agricultural Development Fund (ADF), celebrated the Potato Harvest with producer cooperatives in Bamyan. ADF has been operating in Bamyan province since 2011 in partnership with the Provincial Delegation of MAIL to serve a small number of clients. The increase in the number of loans provided in the province required of a stronger presence that resulted in the opening of ADF provincial office in June 2013.

H.E. Mr. Rahimi said: "Agricultural credit provided by the ADF is having a strong impact on the rural communities; it is indeed unleashing the true potential of Afghan agriculture".

H.E. Dr. Habiba Sorabi, Bamyan Governor stated: “People are shifting from the traditional ways of farming to modern ways, the main product in Bamyan is potatoes, but due to bad roads and lack of storage and agricultural credit they couldn’t sell for a good price. Now we have Agricultural credit, more than 1,000 potato storage units, and good roads.”

To date ADF has approved loans for over US$ 78 million. These loans are directly benefiting over 22,000 farmers in 32 provinces. The work carried out with potato growing cooperatives in Bamyan province is one of several examples of how credit is supporting the growth of agriculture.

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For years, Dehqan Roz manufactured plain yoghurt using the most basic equipment and production process. Milk from two suppliers was made into yoghurt, which was delivered to small shops in Kabul.

The company was able to raise its game after it procured a loan from Agricultural Development Fund (ADF). It bought modern processing machinery and was able to improve the quantity and quality of its products. And it started to buy milk directly from producers around Kabul. Dehqan Roz’s metamorphosis is a good example of the way a loan can bring about positive change.

Dehqan Roz is 1 of 180 ADF clients around the country. To date ADF has approved loans for over US$ 80 million. These loans are directly benefiting over 22,000 farmers in 32 provinces.

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Sayel Food Processing Company is based in Jalalabad city, Nangarhar province. The company produces crispy potato chips and during thelast 3 years it has supplied the local wholesale market.

The Agricultural Development Fund (ADF) provided a Sharia Islamic Finance product to the company in order to increase their production, lower the costs and compete with imported chips.

ADF also linked Sayel Food Processing company with potato producing cooperatives in Bamyan province, which are also ADF clients.

Sayel Food Processing company is one of over 22,000 ADF clients over around the country.

Over Fifty percent of the ADF portfolio consists of Islamic loans.

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Orgun is a district located in the margins of Patika province in Afghanistan. The main economic activity in the district is the collection, processing and trade of pine nuts, one of the world's most expensive food ingredients.

In 2005 a group of traders formed the Paktika Orgun Pine Nut Association, seeking to collaborate in order to increase the competitiveness of their product, while finding ways to bypass Pakistani traders. Pakistani wholesalers would typically provide Afghan traders with small cash advances to purchase the pine nuts from collectors and deliver them to Lahore, where prices were barely high enough to pay for transport.

In 2012 the Agricultural Development Fund (ADF) provided the association with an Islamic loan for AFN 15,000,000 structured as Wakala with Arbun, which provided the association with the means to provide cash advances to 800 rural households.

The benefits of this loan were immediately obvious, the association is selling their product in China, at prices substantially higher than those paid in Pakistan; because Chinese importers require better quality, the association is employing a large number of women in the process in exchange for regular compensation. This is relevant since before the loan, women would extract the seeds from the cones and would only receive the pine cones as payment.

This is one of many ways in which agricultural credit is providing rural households with economic freedom, prosperity and social stability.

Paktitka Urgun Pine Nuts Association is one of over 200 ADF clients in 32 provinces of Afghanistan.

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