As the government reduces preferential lending to the agricultural sector, the instrument of agricultural receipts can become an effective alternative. This mechanism of raising funds is constantly evolving and improving all over the world. Experts from IFC and the UAC told how this process is going on in Ukraine during the webinar "Agricultural Receipts: Access to Finance during the War and Future Prospects".

"The Ukrainian Agri Council considers that the topic of agrarian receipts is a priority, because for the agricultural sector there are difficult times. We need to look for additional ways to raise funds. The 5-7-9 program was very popular among producers, but it is not enough. In addition, the government plans to bring business to market conditions, and we can expect that preferential bank lending programs may be reduced. The agricultural sector needs an alternative, and therefore agricultural receipts may become a common tool for farmers.

It is also necessary to ensure effective legislative regulation of this industry. Currently, the Parliament is considering two important draft laws that were developed with the participation of the UAC - Draft Law No. 9352 "On Amendments to Certain Legislative Acts of Ukraine to Create Conditions for Attracting Funds for Agricultural Production" and Draft Law No. 9352 "On Electronic Agricultural Receipts". We expect them to be adopted as soon as possible," emphasized Dmytro Kokhan, Deputy Chairman of the UAC. 

In the future, agrarian receipts will also be extended to the livestock and processing industries.

Kyrylo Mukhomedzyanov, Financial Sector Specialist of the Project "Development of Access to Capital Markets for the Ukrainian Agricultural Sector", IFC, World Bank Group, said:

"We worked hard to develop a mechanism for raising funds abroad through the securitization of agricultural receipts, but with the beginning of Russia's full-scale invasion of Ukraine, these plans are almost unrealizable. We have shifted our focus and are working on modernizing these instruments. We want agricultural receipts to become an even more modern, safe and cheaper. We are working on making it possible to use it not only in crop production, but also in livestock farming and processing." 

Before the war, agrarian receipts were most commonly used in relations between farmers and input suppliers - 60% of cases, while financial receipts with a loan agreement accounted for 30%.

Most often, agricultural receipts were used to finance working capital, but there were also cases of financing fixed assets, in particular when purchasing agricultural machinery. There are cases of agrarian receipts being used in organic production, horticulture, and the purchase of agricultural land.  Experts expect that agrarian receipts will further expand their range of applications in the future.

The video of the webinar is available here: http://surl.li/mnsmr