Bsef2012 session3 agriculture_voloshina

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OLENA VOLOSHYNA, Head of IFC in Ukraine - HOW TO INCREASE AGRICULTURAL PRODUCTION

OLENA VOLOSHYNA, Head of IFC in Ukraine - HOW TO INCREASE AGRICULTURAL PRODUCTION

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  • 1. HOW TO INCREASE FOOD AND AGRICULTURAL PRODUCTION: INVESTMENT OPPORTUNITIES Elena Voloshina Head of IFC operations in Ukraine October 2012
  • 2. Global food demand increasing 2,400 Production Consumption Food demand is to grow by 70% 2,300 by 2050: 2,200 Population increase and Global Grains (mmt) 2,100 urbanizations trends 2,000 Rising incomes Change in consumption patterns: 1,900 1,800 less cereals 1,700 more vegetables, oils, dairy and meatSource: USDA/John Deere Threat: increasing volatility on FAO estimates the world would need to boost food markets due to shrinking agricultural investment to USD$ 83 billion a year by global stocks, market speculation, 2050, a 50% increase over the last decade’s average govt interventions (export bans) investments. 2
  • 3. Where is the growth potential? Land and water are scarce resources High gaps between Black Sea Belt current production and potential in Latin America, Black Sea Region and Africa Natural conditions are favorable in Latin America and Eastern Europe 3
  • 4. IFC Business Solutions for Ukraine Agribusiness Financial Products• Loans• Equity and quasi-equity• Syndications• Structured and securitized products• Risk management products• Trade finance
  • 5. IFC Business Solutions for Ukraine Agribusiness Advisory ProgramsPolicy: Investment Climate for Agribusiness in UkraineImproving access to finance: Agri-Insurance and Agri-FinanceprogramsImproving efficiencies and increasing production: Food Safety,Cleaner Production and Supply Chain Development programs Also a joint initiative with EBRD: crop receipts • A new instrument based on Brazil pre-harvest finance experience • The law on the agrarian receipts passed in the 1st reading 5
  • 6. Case study: MHPMHP – one of the first IFC investment clients in Ukraine:First deal – 2003 ($30 mln loan to expand production)Repeat deals: 2005 and 2010 (in 2010: $50 mln loan forexpansion and $11.25 mln credit sharing facility to leaseagri machinery with ING Lease)Also advisory involvement: resource efficiency and foodsafety 6
  • 7. Case study: MriyaAgroholding• IFC financing in 2010, 2011 and 2012: a total of $90 mln• Advisory support:Energy audits at sugar plants, also Ukraine’s first loan under IFC’s Cleaner Production Lending FacilityFeasibility study: straw to cellulose 7
  • 8. Case study: Bayer/Raiffeisen Bank Aval and CreditAgricole - an innovation on Ukraine’s financial market Farmer Farmer Farmer Farmer Farmer Farmer 50/50 Promissory RSF note Bayer-IFC cooperation 50/50 Farmer Farmer Farmer Farmer RSF Promissory Farmer Farmer note In 2011 IFC partnered with Bayer and Raiffeisen Bank Aval to develop a risk-sharing facility to make high-quality crop protection products more affordable for independent farmers and smaller agricultural companies In 2012 a new bank Credit Agricole was added to the financing scheme with Bayer 8