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The project will continue to inject liquidity directly into the primary
agricultural sectors of grain and sunflower-seed farming, where Ukraine has a
great natural advantage of probably the best natural growing conditions in the
world.
The farming sector in Ukraine is in an early stage of transition and the
project will address two obstacles to transition of the sector,
(i) the inefficiency of the primary markets for the origination of
agricultural products, resulting in barter transactions, lack of transparency,
high volatility and low prices for the farmers
(ii) the lack of trust in a reliable grain warehousing system.
The Project will help achieve the transition objectives as follows:
1. Expansion of competitive interactions and linkages to other sub-sectors,
e.g. grain warehousing. Toepfer is strongly committed to the reform of the
grain storage sector and to the introduction of the Warehouse Receipt
legislation and practices. The visible participation of Toepfer will lead to
an increase in the transparency in the grain origination market, reducing the
proportion of barter transactions and helping to get better prices for the
primary-agriculture producers, the farmers.
2. Syndication of this substantial transaction to foreign commercial banks
will enhance the visibility and attractiveness of Ukraine to other Western
financiers.
3. Institutional dialogue: In parallel with this project, the Bank has
initiated an institutional policy dialogue and signed a Memorandum of
Understanding with the Ukrainian authorities regarding creation of the legal
framework for this system and related infrastructure. The project will help
prepare the ground for introduction of a viable warehouse receipts system in
Ukraine.
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