THE CHALLENGE:
Ukraine’s capacity for sustainable, broad-based growth is stalled by:
- Agricultural SMEs’ lack of productivity;
- Limited access to markets for SMEs;
- Deficient supporting infrastructure; and,
- Poor enabling environment for investment.
According to the Food and Agricultural Organization of the United Nations, Ukraine’s agriculture is performing at one-third of its production capability and one-half of its potential for contributing to GDP.
Ukraine requires assistance to tap its vast potential in agriculture, which would diversify the economy, leading to economic recovery, better wealth distribution, and reducing poverty among rural population.
PROGRAM OBJECTIVE:
To accelerate broad-based economic recovery through a more inclusive and competitive agricultural industry.
OVERVIEW:
Agriculture is one of the few sectors that continued to grow during the economic crisis. With its 11% contribution to Ukraine’s GDP and the largest share in the country’s export revenue (37%), the sector is central to Ukraine’s economy and can play an even larger role if policy reforms and institutional changes are made. Ukraine is one of the few areas in the world where substantial increases of agricultural productivity and overall output are possible. This growth would be especially beneficial for14 million inhabitants of rural Ukraine that suffer from high levels of unemployment, widespread poverty, and poor logistical and social infrastructure. Those factors force young people to leave, robbing rural communities of those members most able to lead a process of revitalization. The agriculture sector requires reforms to stimulate private sector investments and technical innovation as well as reduce the regulatory burden on business. Critical reforms include introducing a full-fledged and transparent farm land market, irrigation policy reform, implementation of international food safety standards to diversify exports, and institutional strengthening of the Ministry of Agrarian Policy and Food. Implementation of such an agenda will result in agriculture making an even greater contribution to Ukraine’s economy and the well-being of its citizens.
ONGOING PROGRAMS:
USAID supports resilient economic growth through more inclusive, competitive, and better governed agriculture that provides attractive livelihoods for rural residents. Alongside private sector partners, financial institutions, other donors, and the Government of Ukraine, USAID promotes agricultural development that contributes to inclusive and sustainable broad-based economic growth and facilitates Ukraine’s integration into the EU.
Agriculture and Rural Development Support
The USAID Agriculture and Rural Development Support supports broad-based, resilient economic growth through a more inclusive, competitive, and better governed agriculture sector that provides attractive livelihoods in rural areas of Ukraine. The objectives of this program are: 1) improved enabling environment and governance of the agricultural sector, 2) increased investment, productivity, employment and incomes in the agricultural sector, and 3) improved welfare of rural communities and vulnerable producers.
Credit for Agricultural Producers
CAP will strength capacity of Ukrainian credit unions to expand agricultural lending which will increase employment and income opportunities in rural communities of Ukraine.
Water for Agri-Sector
USAID rehabilitates water infrastructure systems and improves the water supply for rural residents for both individual and agricultural use in Kherson oblast.
Development Credit Authority (DCA) Loan Portfolio Guarantee Program with ProCredit Bank
Launched in September 2015, a DCA loan guarantee program with ProCredit Bank encourages more long-term financing for agriculture and clean energy while demonstrating the viability of financing in both sectors. The program provides $9.5 million in loans over eight years.
Development Credit Authority (DCA) Loan Portfolio Guarantee Program for Agricultural SMEs
Launched in September 2014, a DCA loan portfolio guarantee program with five partner credit unions from Kherson, Lviv, and Kharkiv enables credit unions to develop specialized loan products, explore the agriculture sector for eight years under the guarantee, and provide $6 million in new lending to underserved small farmers in their regions.
Agribusiness Partnership Initiative
Agriculture Partnership Initiative (API) is a part of the Feed the Future (FTF) Partnering for Innovation (P4I) program. API works with the private sector to co-finance and co-design activities that address long-standing agricultural development challenges in Ukraine. This activity addresses the Mission’s objective of increasing the productivity of agricultural small and medium enterprises (SMEs). With a $4.1 million dollar USAID investment, API leveraged an additional $10 million by awarding 4 grants to private sector partners: Bayer/IFC, Danone/ICF, Agrobonus and Agrico.
PROGRAM HIGHLIGHTS:
Water for Agri-Sector
- Six water supply improvement sites put into operation (1,925 hectares of land are irrigated now benefiting 9,161 local people);
- Three water supply management cooperatives created and registered;
- Training Center established to spread out best practice in the region.
Agribusiness Partnership Initiative
- Over 9,000 farmers, agribusiness and service providers trained in best farm management
- 650 small farmers educated in benefits of timely and accurate soil sampling to improve productivity.
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