Kiev, Ukraine, March 31, 2011—IFC,
a member of the World Bank Group, and the European Bank for Reconstruction
and Development, are partnering to promote the introduction of new financial
instruments that could boost Russia and Ukraine’s agricultural output
and help reduce global food prices.
IFC and EBRD are helping both countries examine how laws might be changed
to help increase investment in agribusiness operations and the feasibility
of allowing farm owners to use future harvests as collateral when applying
for loans. A similar initiative in Brazil in the early 1990s saw access
to finance for agribusiness and crop outputs rise substantially as a result.
“This initiative, which should result in joint EBRD and IFC lending against
future crops, will give a boost to the development of agribusiness in EBRD
countries of operations, enabling local companies to access funding for
their growth,” said Peter Bryde, EBRD Deputy Director for Agribusiness.
Currently, the agriculture sector in Russia and Ukraine is constrained
by regulations that prevent financial institutions from lending to farm
businesses using future harvests as security. IFC and EBRD will help officials
from the two countries study the applicability of the Brazilian model there.
“IFC/EBRD involvement in this type of commodity-backed lending will have
a demonstration effect on other financiers, capitalizing on the grain export
potential of both countries,” said Elena Voloshina, IFC Country Representative
In early March, officials from Russia and Ukraine travelled to Brazil to
meet with key stakeholders and learn more about that country’s success
with crop receipts legislation. Funding to study the feasibility of crop
receipts legislation in Russia and Ukraine comes from the EBRD’s Shareholder
Special Fund, the UN’s Food and Agricultural Organisation and USAID.
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in developing countries. We create
opportunity for people to escape poverty and improve their lives. We do
so by providing financing to help businesses employ more people and supply
essential services, by mobilizing capital from others, and by delivering
advisory services to ensure sustainable development. In a time of global
economic uncertainty, our new investments climbed to a record $18 billion
in fiscal 2010. For more information, visit www.ifc.org.