Small and Medium-Sized Farmers Grow More Competitive Thanks to Credit Union Financing

Speeches Shim

Friday, December 10, 2021
Farmer Viktor Petrovskyi explaining the specifics of mill operation. Kamianets-Podilskyi Rayon, Khmelnytskyi Oblast, May 2021.
Photo: courtesy of the USAID Credit for Agriculture Producers (CAP) activity

In Ukraine, small and medium-sized farmers and agricultural businesses still experience challenges being competitive in local and international markets. These include a need for improved quality, consistency, and production. This is when access to affordable and timely financing, provided by partners of the USAID Credit for Agriculture Producers (CAP) activity, comes to the light. 

Viktor Petrovskyi, a farmer and owner of the Khlibnytsia Petrovskoho bakery in Kamianets-Podilskyi, needed additional financing to increase his business’ efficiency. In the past, his bakery used flour he bought from other farmers. To reduce his costs and become more competitive, he decided to produce the flour himself. For that, Mr. Petrovskyi needed an investment loan to buy his own mill, but banks either declined to finance his project or had very complex loan requirements that he could not meet. 

Local farmers advised Mr. Petrovskyi to join Credit Union PVKS – a CAP partner since 2018. CAP assistance had helped partner credit unions expand agricultural lending by increasing the range of loan products for farmers, introducing modern risk management tools, and developing targeted communications and sales strategies that helped develop stronger relationships with borrowers.

After assessing Mr. Petrovyski’s business in line with international underwriting practices, PVKS issued him an investment loan of UAH 1 million (US $37,000) to cover two-thirds of the cost of the flour mill.  “Helping small businesses, especially those operating in rural areas, expand and contribute to their communities is a top priority” said Iryna Boyko, PVKS Regional Director.

Mr. Petrovskyi received the loan in the spring of 2020 and bought a mill from the Mogyliv-Podilskyi Engineering Plant. This enabled him to produce 15 tons of milled grain per day, lowering his average sales price by 10%,  which made his goods more competitive. By bringing together local crop producers and buying wheat for his own bakery and other local bakeries, Mr. Petrovskyi helped create a value chain that did not exist previously. 

Soon the value chain will expand to Mr. Petrovskyi’s new business - a poultry farm that will use the mill scraps as feed. To achieve this goal, he plans to apply for additional financing from PVKS, once his current loan is repaid. 

Asked about his success, Mr. Petrovskyi reflected, “Do you know why people reach out to credit unions? Because everything you need is here, in the credit union. And because it’s simple. ”


Last updated: December 10, 2021

Share This Page