The FINANCIAL — IFC, a member of the World Bank Group, is partnering with Raiffeisen Bank Aval and Bayer to make high-quality crop protection products more affordable for smaller farms and agricultural businesses, helping Ukraine boost agricultural productivity.
IFC and Raiffeisen Bank Aval are launching a new risk-sharing facility that will enable farmers to buy crop protection products on credit from industry leader Bayer, with the purchases to be paid in full once the year’s crops are sold. It will cover up to $60 million of seasonal payment obligations to Bayer, of which IFC will guarantee up to half the value, according to IFC.
“Our new project will continue to improve access to affordable funding for agribusiness, despite the challenging macroeconomic conditions in Ukraine,” said Volodymyr Lavrenchuk, CEO of Raiffeisen Bank Aval. “Since lending is still quite expensive for agrarians, our bank is paying special attention to affiliate programs that offer financing at subsidy interest rates.”
Andreas Loechel, Head of Bayer Crop Science in Northern Black Sea Countries, said: “Given the challenging economic conditions, most SMEs [small and medium enterprises] in Ukraine are facing financial constraints and unable to obtain the funds they need to buy crop protection products and seeds. Our joint project will provide the support farmers need to do this and help them maximize quality crop yields.”
The financing is supported by a nationwide program delivered by IFC’s advisory team and Bayer on how to improve crop quality and yields using the best practices of sustainable agriculture. About 8,000 farmers across Ukraine received training in 2014 and more are expected to be trained.
Rufat Alimardanov, IFC’s Country Manager for Ukraine and Belarus, said, “Agribusiness is key for the Ukrainian economy, accounting for about a third of exports and around 20 percent of employment. IFC is committed to supporting the sector further. We believe this project will set an example to other financial institutions of how financing SMEs in the agribusiness sector is possible.”
The new project builds on the experience of an innovative previous facility launched four years ago by IFC, the crop production specialist-Bayer and leading Ukrainian bank- Raiffeisen Bank Aval, which helped farmers bridge the gap for financing critical inputs between sowing and harvesting. The guarantee provided over $36 million in affordable financing to 128 farms, with the program reaching more than 11,327 farmers.
