Iryna Dubovets, a specialist in financial services at BASF T.O.V. Ltd

With the introduction of agrarian receipts, we take care to give agrarians easy access to a resource with which they will be able to receive innovative quality tools for field crop protection in a timely manner.
BASF does not work directly with the end consumer: farmers can purchase our crop protection products (CPP) exclusively through distributors. The same applies to agrarian receipts for CPP, which are issued as part of a contract between an agrarian and a distributor: the agrarian receives our product on the security of a future harvest and undertakes to pay at an agreed time. And then the distributor transfers us the receipts under the receivables assignment agreement.
The receipts should become the most convenient and simple financial tool for Ukrainian farmers in terms of execution and use. Receipts are issued solely on the security of the future harvest, and harvest is one of the most liquid assets because this is the main source of income for the farm, giving the creditor more confidence that the farmers will fulfil their obligations.
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Agrarian receipts can also be used to manage currency or price risks, if the terms of a receipt specify that the cost is pegged to currency or purchase price fluctuations. An undisputed advantage of the receipts should be an already existing unified open register of agrireceipts: a creditor can request debtors to provide a copy of their credit history (the history of closing a receipt) from the register, which is issued by a notary. To be issued with an agrarian receipt, an agricultural company must have titles to land plots, on which it will grow pledged crops. These land plots must be properly and legally registered. Pegging the pledged crop to land plots makes the creditor's monitoring of the collateral possible and effective, and also facilitates the process of foreclosure.
Oleksiy Petukhov, director of Eximleasing LLC

According to statistics, more than 50% of available agricultural machinery and equipment needs to be updated. Often, agricultural producers (small and medium-sized businesses) cannot afford to take significant amounts out of their current assets to buy a tractor, harvester or soil-cultivating machinery. Banks may issue a loan with a small down payment, if there is an additional security, or if the borrower increases his or her own contribution. Leasing companies understand that they own the machinery and can reduce the down payment without requiring any additional security. This makes leasing attractive to lessees. At the same time, having paid only a down payment, a client of a leasing company receives a package of services: the issue of buying the equipment is settled, difficulties with the supplier are resolved, the client is provided with registered and insured equipment. Having paid a small down payment, the lessee receives a tax credit for the entire cost of the leased property while depreciation deductions reduce the base for taxation.
All these advantages of leasing make it a popular tool for purchasing agricultural machinery. One can say with certainty that for most leasing companies, more than 50% of their machinery stock is made of leased items financed for agricultural producers.
Financing under leasing programmes is allocated for up to five years, and there is a choice between a seasonal repayment schedule and a classic one. Over the last two years, the cost of raising funds has decreased by an average of 3-5%, which has had its effect on the price of leasing services for clients by making them more affordable.
Cooperation with partners which produce agricultural machinery is one of the priority areas. Usually such partner programmes are good for sales for both the manufacturer and the leasing company. They benefit everyone, including the client, who receives a preferential financing rate, a convenient repayment schedule, and additional discounts which would otherwise be inaccessible if not for a joint programme.
Natalia Porvina, head of Credit Analysis Department at Credit Agricole Bank

Over the past two years, Ukraine's banking sector has displayed a trend towards active lending, especially to agricultural producers. The structure of banks' credit portfolios is also changing in terms of the intended use of loans: the share of loans for investment purposes is increasing. During the economic crisis, most loans were used to replenish current assets (to buy seeds, crop protection products and mineral fertilisers). Investment financing has become more active since the end of 2015.
Currently, banks offer seasonal funding of farm expenditures on sowing and harvesting campaigns for up to 18 months under the pledge of movable (agricultural machinery, equipment) or immovable property, as well as property rights under contracts, future harvest or grain in warehouses.
Agricultural companies often use alternative financing instruments such as avalization of bills and bank guarantees. These products allow them to significantly reduce the cost of financing, which reflects well on their profitability.
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In 2017, banks financed the purchase of agricultural machinery and equipment. They actively developed and offered partner programmes (with dealers and manufacturers) on favourable for clients financing conditions.
The assessment of agricultural companies applying for loans and their owners is mandatory. For instance, banks have always paid particular attention to the client's reputation, business efficiency, quality control and management. They also analyse technologies used by the company, the effectiveness of its current business model and its operating performance. In addition to being financial experts, our bank's employees hold university degrees in agriculture (agronomists, veterinarians). The bank's agricultural team spends 70% of its time "in the fields", communicating with customers and partners and studying market trends. Our priority is to work with companies that are interested in long-term business development and do not limit their plans by one sowing campaign only.
Maksym Boyko, an agro insurance specialist at AXA Insurance

Today crop farms are offered insurance against all weather risks, epiphytotics, secondary diseases, fire and illegal actions by third parties. Wintering crop insurance programmes are "Damage or loss (partial damage)", "Total loss" and "Total loss and spring frosts". For the spring-summer period, farmers are offered insurance of the future harvest, insurance against the occurrence of named risks and multirisk (comprehensive) insurance.
In total, there are about 10 active insurance companies offering agrarian insurance solutions to the market. Rates depend on a programme. For example, if you want to insure winter wheat crops for the spring-summer period (before 1 August), the rate will be approximately 4.5% with a 30% franchise deductible if they are insured against all risks.
To report an insured event, it is enough to call our company's hotline and follow the guidance of a company representative. If crops are lost in the winter, the annex (inspection certificate of crops) to the insurance contract must indicate the density of plants per unit of area, plants per hectare. If more than 50% of the crops are killed, this is a total loss, and the company will pay the entire insurance amount per field after deducting the franchise. When insuring crops of the future harvest, insurance benefit will equal the cost of the future crop failure. That is, of course, if the reason for the crop failure is a risk stipulated by the contract.
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An insurance contract must specify the reasons for which indemnity can be refused. The main reasons are a failure to report an insured event, the creation of obstacles to determining the causes of an insured event and the amount of damage, or if plants were damaged not as a result of insured risks (industrial, mechanical, man-caused).
In addition to regular agricultural risk insurance programmes, some insurance companies offer joint programmes with crop protection agent producers and banks. A peculiarity of such programmes is that, for example, the manufacturer of crop protection products or seeds partially or completely pays an insurance benefit to the farmer, which makes such cooperation profitable for all parties. For an insurer, this is a way of attracting new customers, for a manufacturing company it is a way of increasing sales, while a policy holder receives reliable insurance protection at a lower price.