The European Bank for Reconstruction and Development is joining forces with Raiffeisen Bank Aval, a subsidiary of Raiffeisen International of Austria, and the world’s leading supplier of agricultural machinery John Deere to help Ukrainian farmers purchase high quality farming equipment.
The three institutions will share the credit risks of small- and medium-sized Ukrainian farms purchasing John Deere equipment financed by Raiffeisen Bank Aval and Raiffeisen Leasing Ukraine in a total portfolio of up to US$ 50 million.
The project is addressing the issue of availability and affordability of high-quality agricultural machinery for these farms. The Bank’s participation allows eligible borrowers to receive long-term financing of up to five years. Raiffeisen Bank Aval, which has broad expertise in agricultural lending and leasing operations, will provide loans and leases to Ukrainian farmers not only in hard currency but also in local currency. This will significantly reduce foreign currency exchange risks for borrowers.
Estimates suggest that over 70 per cent of agricultural equipment operating in Ukraine is obsolete. As a result, this has a negative impact on the overall efficiency of agricultural production – including the quality of the collected grains and crop yields in general.
With a well-established sales and product support infrastructure in Ukraine, John Deere’s advanced agricultural equipment will be well positioned to replace the ageing farm machinery in Ukraine and to significantly increase yields and crop productivity.
The EBRD is the largest financial investor in Ukraine. As of 1 January 2013 the Bank had committed over €8.2 billion (US$ 10.7 billion) through 318 projects.