Ukraine’s capacity for sustainable, broad-based growth is stalled by:
(1) unpredictable and incomplete agricultural policies,
(2) limited financial services for agriculture, and
(3) a weak market infrastructure that leads to low yields and reduces the competitiveness of small and medium producers.
According to the Food and Agricultural Organization of the United Nations, Ukraine’s agriculture is performing at one-third of its production capability and one-half of its potential for contributing to GDP.
Ukraine requires assistance to tap its vast potential in agriculture, which would diversify its sources of prosperity, leading to a broader economic recovery, and contributing to a more food secure world.
To accelerate broad-based economic recovery through a more inclusive and competitive agricultural industry.
More than one billion people worldwide suffer from chronic hunger, and without a substantial increase in the global food supply, the number of food insecure people is projected to increase. Ukraine’s fertile soil and large land resources have the potential to make significant contributions towards feeding a world that, according to the United Nations, will need to produce 70 percent more food by 2050. USAID helps Ukraine reclaim its “breadbasket” role in the world and catalyze broad-based economic growth by supporting development of a stable, market-oriented policy environment; stimulating agricultural finance; and promoting more effective market infrastructure for small and medium producers.
This five-year, $18.7 million USAID activity aims to accelerate and broaden economic recovery in Ukraine and contribute to global food security efforts by creating a more inclusive and competitive agricultural industry. In particular, AgroInvest will increase awareness of land rights among rural landholders and producers, facilitate the adoption of market-oriented legislation needed for agricultural land reform, increase agricultural lending to small and medium agricultural producers, establish wholesale and regional markets, and strengthen the capacity of producer organizations and industry associations.
Water for Agri-Sector
The project is supporting rehabilitation of water infrastructure systems and improvements in water supply for rural residents, as well as improvements in agricultural production, in the Kherson oblast.
Development Credit Authority (DCA) Loan Portfolio Guarantee Program for Agricultural SMEs
Launched with five partner credit unions from Kherson, Lviv, and Kharkiv, the DCA loan portfolio guarantee program enables credit unions to develop loans and provide $6 million in new lending to small farmers in their regions. The program helps reduce collateral requirement, which have significantly hampered access to finance for small farmers. It is expected that the program will generate further interest among Ukrainian credit unions to expand investments in agriculture, especially to small farmers with minimal collateral bases.
- Passed several laws, including the Law “On Abolishment of a Number of Licensing Documents,” which will improve the business environment in the agriculture sector. The law abolishes mandatory certification of grain silos and grain quality certification, the obligatory technical inspection of agricultural machinery, and mandatory minimal regional stocks of agricultural commodities. Elimination of these requirements will save farmers up to $30 million annually.
- State Land Bank’s liquidated in 2014. The concept proposed behind the State Land Bank by the previous government suggested significant corruption risks as it included several conflicting functions and was based on a preferential position of the State Land Bank vis-à-vis other market participants.
- Developed and implemented a policy program to prevent abuse of power and corruption in land relations.The program has already resulted in the drafting of four laws that are presently at various stages of readings and revisions within the Verkhovna Rada.
- To improve operations of the registry of property rights, AgroInvest partnered with the Ministry of Justice, the State Registration Service and the State Land Agency to identify the most critical issues and ways to streamline operation of the registry. Supported implementation of a national training program for state registrars and notaries in which 3,000 state registrars were trained. This effort contributed to reducing by 18 days the time to process applications.
- Conducted agro-technological trainings for 85 financial officers from 14 financial institutions, increasing their knowledge of current practices.
- Two new loan products for small farmers were developed and promoted: (i) loans for farm development and (ii) loans for small holding (individual homestead) development. A third loan product based on promissory notes was developed in cooperation with Kredobank. The loan products were accepted by several large input suppliers such as DuPont, BASF and Eridon, and the first three loans with a combined total of 2 million UAH were issued by Kredobank to small farmer customers.
- Activities to support access of small farmers to finance resulted in $19.2 million in lending for 7,000 credit transactions over the past year.
Water for Agri-Sector
- Memorandum of Cooperation between the project and the Kherson Oblast State Administration is signed.
- The selection process of sites for implementation is in progress, to be completed by May 2015.
Last updated: August 04, 2015