The Agrarian IOU Program has been working in Ukraine since 2015. During the three years of the program, agricultural producers have attracted over 5 billion UAH for their activities, writes “Agro-Center”.
The agrarian IOU project is being implemented in Ukraine by the International Finance Corporation, a member of the World Bank Group, in partnership with the Swiss Confederation in Ukraine. Today, agrarian IOUs do not involve direct allocation of budget funds to farmers but cover farmers’ expenses.
In 2018, farmers received almost 800 IOUs. Experts say that farmers were paying back with very unexpected goods: hay, wild rose, milk, apples. 90% of the IOUs were issued to small and medium producers.
“An agrarian IOU is an arbitrary agreement between a supplier of, for example, fertilizers or agrochemicals, plant protection products, seeds, and a producer of agricultural products. A document is drawn up in any form, you only need to register it with a notary. It looks like this: in the autumn or spring you get money or resources from a supplier and give him a product (grain, corn) or money,”
said Olena Kovaleva, Deputy Minister of Agrarian Policy and Food of Ukraine.
At the beginning of the project implementation, only one region of Ukraine took part. However, in 2018, all regions of Ukraine joined the program. What is more, six banks that take agrarian IOUs as collateral for loans started to participate in the program.
The main advantage of agrarian IOUs for farmers is adaptability to the needs of small and medium-sized farmers. IOU’s also offer a farmer an opportunity to attract quick and cheap seasonal funds. The program of agrarian IOUs has a simplified procedure for the execution of documents and more loyal requirements for collateral.