Over the years of work in Ukraine (since 1992) the International Financing Corporation (IFC) has become one of the largest investors in the domestic economics, including agrarian sector. The total amount of invested funds exceeds 1.2 bln USD, allowing to realize nearly 50 investment projects. The IFC introduces the mechanism of agrarian receipt in the agro-inductrial complex of Ukraine, as a new form of support. The manager on IFC activity in Ukraine, Elena Voloshina tells more detailed information on the stated issue and the company's view on the further development of investment component of Ukrainian agrarian sector.
- What are the major problems on the investment promotion in the agrarian sector of Ukraine?
In the long-term prospect the Ukrainian agrarian sector is attractive for various investors, owing the possibility to find interesting projects with investments' profitable return. The IFC actively supports the agrarian sector, investing funds in the whole chain of production. There are companies-clients of the corporation producing grains and other crops, meat, tomato paste and sugar as well. A lot of them can compete with other producers on the global level.
Considering more short-term prospects, to date, most of Ukrainian companies, and not only in the agrarian sector, have problems with financing. In the Ukrainian banking system long and short resources are available only for the best loan debtors. First of all, the foreign investors want to see macro-economic stabilization. The IFC is the development institute and long-term partner of the Ukrainian private sector and under the conditions of transitional period the corporation continues to support its clients, providing financing. In late May the board of directors approved the financial package for Mironovsky Hliboprodyct at the amount of 250 mln USD. The stated project is the biggest in the agrarian sector of Ukraine. The stated package includes the IFC's own funds and the funds from other investors as well.
- Which mechanisms on the investment promotion does the IFC propose for the Ukrainian market?
The major demand on the market is for the short financing products, and the company is ready to provide such products.
At the same time, the corporation works with its partners on the more complicated contracts and products. For example, in cooperation with Bayer group and Bank Credit Agricole and Raiffeisen Bank Avalthe corporation launched the program on risks sharing. Also, during the few years the company has been proposing the special bills, which help the middle-scale producers to get an access to more effective crop protecting agents. There is a demand on the stated products on the market, so the corporation will be ready to structure the products with other partners.
Also, in cooperation with the Government, other international financing institutes and such companies as BASF and Syngenta Company is working on launching the new tool in Ukraine- agrarian receipt, which allows to attract the additional financing for the sector from fertilizer producers, seeds suppliers, etc. The stated tool was launched in Brazil and allowed to attract billions of additional financing.
- What are the major advantages of agrarian receipts application as the alternative mechanism of investments promotion?
Usage of agrarian receipt has the variety of economic advantages for agricultural commodity producers and fertilizers, crop protecting agents, seeds and fuel producers as well.
In particular, the commodity agrarian receipt allows the agricultural producer to finance agricultural commodities' production foe account of harvest sale before its harvesting and takes out of risk on prices decrease for commodities. The stated issues are based on the liabilities' fixing in quantity of goods instead of monetary value. At the same, the stated receipts allow the suppliers to provide the liabilities execute for the delivered goods with future harvest.
- Why, after the Law came into force, the agrarian receipts were not actively used in Ukraine? Will the stated receipts become the financing effective mechanism for agricultural producers?
The Law on agrarian receipts came into force in March, 2013. But, it is necessary to pass other regulations for its successful adaptation. So, the corporation is working on this issue and plans to provide one of the regions with the pilot project in order to test the practical usage of receipts.
- Is the Government able to promote the active usage of agrarian receipts? In particular, through the activity of grain market's state operators?
The Government can provide the active usage of agrarian receipts by supporting the Draft Law initiatives. If it is about the state operator, the IFC believes that the private initiative is the most effective. Thus, the Ukrainian agrarian sector reached success owing the private initiative and business spirit.
Interviewed by AlexanderPryadko
