Ukrainian farmers will soon be able to get a new progressive tool for attracting financing. On May 2, 2023, the draft Law №9266 "On electronic crop receipts" was registered in the Verkhovna Rada of Ukraine, which combines the advantages of traditional crop receipts with the advantages of capital markets and the depository system of Ukraine.
The introduction of crop receipts in the form of electronic non-emission securities will make the lending procedure more accessible and easier and will facilitate access to financial resources for small and medium-sized agricultural producers, which is especially important in these difficult times.
Agroprosperis Bank specializes in the financing of agribusiness and is the first bank in Ukraine that began to provide credit against crop receipts. Over seven years, we provided 1.6 billion UAH as collateral for this instrument. These are hundreds of Ukrainian farmers who finally got access to sufficient financing and, accordingly, the opportunity to increase production efficiency and business profitability.
Crop receipt is a financial instrument that allows agricultural producers to attract monetary and commodity resources as collateral for the future harvest. The draft Law №9266 provides that crop receipts will be introduced in the form of electronic non-emission securities and will function alongside traditional crop receipts in paper form. The circulation of electronic crop receipts will be carried out in the depository system of Ukraine, which will contribute to attracting financial resources to the agricultural sector from foreign capital markets through the correspondence relations of the National Depository, and the electronic format will allow issuing receipts without a notary certificate.
As a result of the adoption of the draft law:
- The electronic crop receipt will become an independent subject of circulation on capital markets, including foreign ones, an object of purchase and sale and a source of profit;
- It will be possible to make it significantly easier and cheaper to issue, circulate and terminate the validity of receipts in electronic form compared to paper ones;
- The range of entities that can issue crop receipts and those that can invest in the agricultural sector will expand, as well as the list of agricultural sectors that can receive financing (such as animal husbandry, beekeeping, primary processing, etc.);
- Reliability and protection of creditors' rights will increase.
These innovations will have many advantages for all participants in the process and will help agricultural producers to gain wider access to financing and production resources in order to fully realize the potential of the country's agricultural sector.
Agroprosperis Bank participated in the preparation of this draft law, which took place in close and coordinated cooperation of all specialized institutions with the support of IFC within the framework of the project "Development of access of the agricultural sector of Ukraine to capital markets".
Crop receipts proved their effectiveness and made a significant positive contribution to the development of the Ukrainian agricultural sector. We support the modernization of this instrument and hope for a quick consideration and support by the People's Deputies of this priority draft law №9266. We are convinced that its adoption will contribute to the effective development of the agricultural sector and the rapid recovery of the state's economy.
