OREANDA-NEWS. May 17, 2011. IFC, a member of the World Bank Group, is partnering with Raiffeisen Bank Aval to provide a credit enhancement to Bayer Ltd in a landmark deal to improve access to finance to small and medium-sized agricultural companies and farmers across Ukraine.

IFC and Raiffeisen Bank Aval structured a risk-sharing facility on a portfolio of up to USD 140 million of seasonal payment obligations to Bayer, a leading input supplier of crop protection products in Ukraine. IFC’s investment will total up to USD 70 million. Raiffeisen Bank Aval will provide a guarantee to farmers that will allow them to buy on credit from Bayer.

Ukraine enjoys favorable climatic conditions, fertile soil and has emerged as one of the key exporters of grain in spite of relatively low average farm productivity. Access to finance for farmers also remains challenging. Helping the Ukrainian agricultural sector to achieve its full potential by intensifying production and improving productivity is important to global food security.

“We are very pleased to work with IFC and Raiffeisen Bank Aval to launch this pilot in Ukraine. Thanks to this facility, farmers will be able to buy necessary crop protection inputs to maximize crop yields. We have crop protection operations in 60 countries and hope we will be able to replicate it in other emerging markets where farmers face similar financing constraints,” said Tobias Menne, Bayer's Managing Director in Ukraine.

"This facility will allow Raiffeisen Bank Aval, which is an undisputed leader in Ukrainian agro lending, to provide its new or existing farmer-clients with opportunities to improve their productivity through better access to the crop protection products," said Artur Iliyav, Deputy Chairman of the Board of Raiffeisen Bank Aval.

Elena Voloshina, IFC’s Head of Operations in Ukraine, said: “We are offering on the Ukrainian market this innovative facility that will bring together a reputable crop production specialist and a local financial institution with significant experience in rural credit. We are glad to strengthen our cooperation with long-term client Raiffeisen Bank Aval and to set an example for other banks for further investment into this crucial yet largely underserved sector.”

IFC is committed to help Ukraine maximize its agribusiness potential and has so far invested around USD 400 million in the sector. In agribusiness IFC supports the entire value chain from farm production to collection, processing and distribution. It also offers an extensive advisory program, including projects focusing on development of agro insurance market in Ukraine, improving food safety standards and developing supply chains for fruits and vegetables.