Kyiv, Ukraine, April 23, 2020— IFC, a member of the World Bank Group, has helped over 2,000 small farmers in Ukraine gain access to $1 billion of financing through “crop receipts”—an innovative financial instrument that allows farmers to maintain productivity and profitability.
Obtaining bank finance is challenging for small farmers because they often do not have collateral to obtain loans. Crop receipts allow farmers to use future harvests as collateral to obtain working capital financing to purchase high quality seeds, seedlings, fertilizers, and other inputs.
IFC, through its Ukraine Crop Receipts Project implemented in partnership with the State Secretariat for Economic Affairs of Switzerland SECO, introduced crop receipts in selected regions of Ukraine starting in 2015 and rolled out the instrument nationwide in 2018. Till now small farmers have issued 4,000 crop receipts to receive $1 billion in financing. This is a significant development for Ukraine, a country in which fertile land and favorable geography makes agribusiness a key economic driver and major employer. However, lack of finance and investment prevents Ukraine from becoming a global agribusiness leader.
Lukas Schneller, Deputy Head of the Private Sector Development Unit, SECO, said: “SECO is pleased that crop receipts have provided $1 billion in access to finance for small and medium agribusinesses in Ukraine, including farmers in the conflict-affected Donetsk and Lugansk regions. The success of the instrument lies in its diversification. Multiple segments beyond traditional agricultural products have registered for crop receipts, including horticulture, niche , and organic production. This diversification is helping micro and small farmers in particular .
Jason Pellmar, IFC Regional Manager for Ukraine, Belarus, and Moldova, said: “Introducing crop receipts in Ukraine is an initiative that IFC commenced from the bottom up, including legislative work, training of financial institutions, and raising awareness among farmers. Ukrainian farmers now widely use this simple, convenient, and reliable instrument to get much-needed finance. This financial innovation is an important part of IFC’s efforts to help Ukraine realize its agribusiness potential.”
In addition to working with the Ukrainian government to help develop the relevant legislation that is crucial for the crop-receipts initiative, IFC also supported creation of a registry to track crop receipts. Today, crop receipts cover over 40 unique value chains, including traditional grains and oilseeds, as well as niche, organic crops, and other agricultural products such as hay, honey, milk, and cattle.
IFC’s advisory work to expand access to finance for smaller farmers is part of a comprehensive engagement to drive more investment to Ukraine’s high-potential agriculture sector. IFC is also a key investor in the country’s agriculture, committing over $1 billion to support it since 2004.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org
Stay Connected
About SECO
SECO is Switzerland’s competence center for all core issues relating to economic policy. SECO’s economic development cooperation strives to achieve inclusive sustainable growth and poverty reduction in its partner countries. Its activities aim to create more and better jobs, to enhance trade and competitiveness, to support effective institutions and services and to foster climate resilient economies. For more information, visit www.seco-cooperation.admin.ch .
Contacts
Stay Informed
Sign up to have customizable news & updates sent to you.