Ukraine launches a new mechanism to support small farmers: what will the pilot project of guarantees for non-bank lenders change?
11 December 00:40
Ukraine is taking a step towards expanding access to finance for small farms by launching a pilot project to involve non-bank institutions in lending to agricultural producers. This was reported by the Ministry of Economy, Environment and Agriculture, "Komersant Ukrainian" reports.
Who the program is aimed at
The program is aimed at farms with a land bank of up to 500 hectares, a segment that has historically had the most limited opportunities for obtaining loans. Credit unions and financial companies will be selected in cooperation with the Agricultural Credit Guarantee Fund. The Fund will cover up to 50% of the debt on such loans, with a total guarantee limit of UAH 80 million.
What are the conditions for the selection process?
Participants in the selection process must have a valid lending license and submit a set of documents to the Fund. The process will continue until the limit is fully selected, but no later than January 30, 2026.
The pilot initiative is seen as a way to address structural imbalances in the agricultural sector
Previous government programs aimed at stimulating production were largely focused on large agricultural holdings: an audit by the Accounting Chamber showed that only a third of those farmers who really needed support received it.
The government is trying to compensate for the imbalance
The day before, the government increased the reimbursement of farm construction costs in the frontline regions from 25% to 50%. In October, producers received UAH 78 million under the machinery compensation program, and earlier it was announced that the government would finance infrastructure projects, including the construction of vegetable storage facilities.
All of these measures are taking place against the backdrop of large-scale losses in the agricultural sector: it is estimated that direct losses from the war exceeded $11 billion, in particular due to the loss of tens of thousands of pieces of equipment. Therefore, a new project involving non-bank lenders could become a test for restoring the system of affordable financing – and potentially the basis for longer-term support for small farmers.
