Agricultural notes have been launched in Ukraine. What it means for the agricultural sector and investors
11 March 2025 19:09
On Tuesday, March 11, Ukraine piloted the first issuance of an agricultural note with its deposit in the Central Depository, which was an important step in the introduction of this financial instrument in the capital markets. This is reported by "Komersant Ukrainian" with reference to the report of the National Commission on Securities and Stock Markets.
The agrarian note was issued by Agrofirma-Obriy LLC from Khmelnytsky region, and its first owner was AP Import LLC, a member of the Agroprosperis Group of Companies. This company acted as a creditor, and the securities account was serviced by Raiffeisen Bank, a depository institution.
Ruslan Magomedov, Chairman of the National Securities and Stock Market Commission (NSSMC), noted that the launch of agricultural notes is a significant milestone in the development of capital markets and their digitalization. He emphasized that the first issue of this instrument confirmed the market’s readiness for new mechanisms, but also revealed aspects that need to be improved for the system to function properly.
The process of issuing the agrarian note was accompanied by the National Depository of Ukraine (NDU), which holds the Register of Agrarian Notes, as well as experts from the International Finance Corporation (IFC) within the framework of the project “Development of Access to Capital Markets for the Ukrainian Agricultural Sector” implemented in cooperation with the Swiss Confederation.
The NSSMC says that this event was an important step towards expanding the financial capabilities of Ukraine’s agricultural sector and improving access to capital for farmers through modern financing mechanisms.
How agricultural notes will affect the agricultural sector and the financial market
1. Increase the availability of financing for agricultural enterprises without the need to apply for bank loans.
2. Stimulate the development of the capital market and Ukraine’s integration into global financial systems.
3. Ensure greater transparency and investor confidence in financial instruments of the agricultural sector.
4. Allow agrarians to manage their cash flows more efficiently, minimizing the risks of seasonal fluctuations in income.
What is an agricultural note and what is its role?
An agriculturalnote is a non-issue security that certifies the debtor’s unconditional obligation, secured by collateral, to deliver agricultural products or pay money to the creditor in accordance with the terms and conditions specified therein.
Main characteristics of an agricultural note
Form: electronic, in the form of an account in the securities depository accounting system.
Types:
- financial agricultural note. Provides for the payment of funds to the creditor.
- commodity agricultural note. Provides for the delivery of agricultural products.
Collateral: pledge of future harvest or other agricultural property.
Circulation: carried out in the depository system through the Central Depository and depository institutions.
Agrarian note register: an information and communication system that displays information about agricultural notes and their circulation.
Advantages of agrarian notes
Simplified enforcement procedure. If the debtor fails to fulfill its obligations, the creditor has the right to obtain a special extract from the Agricultural Notes Register, which serves as the basis for the enforcement of property.
Enhanced protection of creditors’ rights. From the moment the agrarian note is issued, the debtor loses the right to dispose of the property rights to the land plot specified in it without the consent of the creditor.
Thus, the introduction of agricultural notes opens up new opportunities for financing the agricultural sector of Ukraine, providing additional guarantees for investors and promoting the development of agricultural production.
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