USAID AGRO in Ukraine boosts farmers’ access to loans via private sector partnerships

The USAID Agriculture Growing Rural Opportunities Activity (AGRO) in Ukraine partnered with suppliers of agricultural inputs to enable larger loans for Ukrainian farmers. AGRO will support credit facilities in designing and extending financial instruments tailored to meet the needs of small agribusinesses and farmers amid the war. This will help increase the scope of trade credit. AGRO anticipates that in the next 12 months, a minimum of 600 micro-, small-, and medium-sized agribusinesses will benefit by purchasing plant protection products, seeds, and fertilizers, with a collective expenditure of UAH 460 million.

Due to war-related risks, financial entities scaled back the funding available to farmers. Trade credit, which was previously one of the primary funding sources for Ukrainian farmers, particularly smallholdings, are now being offered on a significantly smaller scale. In the past, trade credit enabled farmers to acquire essential seeds and plant protection products, with the provision to repay the loans after selling the harvest. Limited export and depressed prices for agricultural produce in Ukraine have sapped farmers’ resources, which otherwise could have been invested in seed or plant protection products. Access to loans and agricultural inputs is paramount for farmers in war-torn Ukraine, enabling them to sustain operations, foster growth, and generate employment.

USAID AGRO will support three agricultural input suppliers to extend financial instruments tailored to wartime exigencies. Among such companies, ADAMA and UKRAVIT have already started working on financial solutions for farmers. The companies will be able to mitigate their credit risks and renew trade credit for small farmers, who in turn will gain access to the resources necessary to work efficiently. For each dollar invested by AGRO, the private sector is expected to facilitate $4.2 of trade credit to small farmers.

“Access to funding empowers farmers to respond to the wartime challenges, maintain operations, and ultimately invest in recovery and expansion after the war,” says Kseniya Sydorkina, USAID AGRO Chief of Party. “However, the market has undergone structural changes. We need new solutions that enable credit facilities to adapt and manage risks, while at the same time allowing farmers to procure seed, fertilizer, and plant protection products expediently and on favorable credit terms. The partnership between the private sector and USAID AGRO, an international technical assistance activity, will cultivate novel programs and tools that will revitalize funding in agriculture. In doing so, we will bolster the resilience of the agricultural sector in these trying times.”

This initiative will integrate into USAID AGRO’s broader effort to enhance funding accessibility for small agribusinesses. Since February 2022, 764 micro-, small-, and medium-sized agribusinesses have received $49.8 million in bank loans through the fintech apps developed with AGRO support. This activity is part of the Agriculture Resilience Initiative (AGRI-Ukraine) spearheaded by the United States Agency for International Development (USAID).

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USAID Agriculture Growing Rural Opportunities Activity (AGRO) is a seven-year program of the U.S. Agency for International Development (USAID) implemented by Chemonics International. The Activity aims to accelerate the economic development of rural Ukrainian communities through a better governed agricultural sector that encourages more productive, modern, and profitable micro, small, and medium (MSMEs) agricultural enterprises. USAID AGRO’s objectives are to improve productivity and market access in target value chains, improve support functions, and legal and policy framework in Ukraine’s agricultural sector. Learn more about USAID AGRO: www.facebook.com/usaid.agro

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The United States, through the U.S. Agency for International Development (USAID), launched the Agriculture Resilience Initiative (AGRI-Ukraine) to bolster Ukrainian agricultural production and exports and to help alleviate the global food security crisis exacerbated by Russia’s brutal war on Ukraine. AGRI-Ukraine is critical to supporting Ukraine’s export and agricultural sector needs, which remains vulnerable to the ongoing Russia’s military aggression. USAID contributed $100 million and seeks to leverage an additional $150 million for the Initiative, including from fellow donors, the private sector and foundations, with an overall investment target of $250 million. The AGRI-Ukraine lines of effort include: 1) Purchase and delivery of critical inputs for farmers who have limited supplies or limited mobility 2) Improve and increase export logistics and infrastructure 3) Increase farmers’ access to financing to enable a full crop harvest 4) Drying, storage, and processing support for micro, small, and medium enterprises in the agriculture sector

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The United States Agency for International Development (USAID) is a leading agency of the U.S. federal government that specializes in development. USAID has worked in Ukraine since 1992, supporting the country’s resilience, in particular, in its fight against Russia’s aggression, as well as its democratic and economic development. Today, 42 USAID programs support Ukraine’s immediate needs and foster its long-term development as an independent, sovereign, democratic, and prosperous society. Since the start of Russia’s full-scale war against Ukraine on 24 February 2022, USAID has contributed $18 billion in direct budgetary support, $1.4 billion in humanitarian aid, and more than $1.4 billion in development assistance. Please visit the website of USAID Mission in Ukraine: www.usaid.gov/ukraine, and Facebook page:www.facebook.com/USAIDUkraine.

Tags: Ukraine, USA, credit, USAID