The IFC, the commercial arm of the World Bank Group, in partnership with the Swiss and Ukrainian governments, is rolling out a new financial instrument – crop receipts – across Ukraine to expand access to finance for small farmers, boosting agricultural productivity and supporting economic growth.
Crop receipts are a pre-harvest financial instrument, currently used successfully in a number of countries (most notably Brazil) which allows farmers to use future harvests as collateral, enabling them to purchase high-quality seeds and other essentials. In particular, crop receipts can help to address the pervasive collateral constraints in the rural economy by providing financiers with additional security. They are expected to facilitate up to 520 million US dollars for Ukraine’s agricultural sector over the next two years. The nationwide roll-out of crop receipts follows a pilot advisory project in eight Ukrainian regions.
“Crop receipts are a highly innovative financial instrument,” said Holger Tausch, director of the Swiss Cooperation Office in Ukraine. “Last year, we expanded the pilot project into eight regions, and this year we hope to expand it to the entire country.”
The project is being implemented by IFC – the largest global development institution focused exclusively on the private sector in developing countries – with financial support from Switzerland’s State Secretariat for Economic Affairs (SECO), a Swiss competence centre for all core issues relating to economic policy.
“Ukraine has the potential to become a global agribusiness leader,” said Jason Pellmar, IFC’s regional head for Ukraine, Belarus, and Moldova. “Our aim is to encourage more private investment to unlock that potential, expanding access to finance for smaller farmers, and fostering innovation in the farming sector.”
As part of the programme, IFC has also worked with the Ukrainian government to develop the necessary legislation and create a registry to track crop receipts easily and transparently. Over two hundred crop receipts valued at over 53 million US dollars have been issued since the pilot project began in 2016.